When the cat is away the mice will play. Good news for the Chinese property market before China’s public holiday break has boosted the confidence and intent of wool buyers on the East Coast this week at auction.
The Chinese Central Bank (PBoC) announced
stimulus activities to assist the maligned Chinese property and equities
market. What this means for the Chinese economy is the alleviation of some
household pressures that have contributed to lagging Chinese consumption and
production. More importantly for the wool trade, it’s a favourable result for
the Chinese economy which underpins global wool demand and returns for
Australian wool growers.
Competitive
bidding returned to the auction room this week in Sydney and Melbourne with all
merino micron price categories improving by double digits. In Sydney, the pass-in rate averaged 2.8%, and
price gains ranged from 10-41¢ with
18MPG specifically improving 41¢ to 1483¢/kg. Melbourne price rises ranged from 10-46¢, with
21MPG 29¢ higher to 1261¢/kg. The result
was the Eastern Market Indicator (EMI) rising 17¢ to 1104¢.
The Western
wool market last week avoided declines and as such gains were minimal this
week, the Western Market Indicator improved 2¢ to 1230¢/kg. Nationally 29, 748 bales were sold.
This week on
Mecardo, Andrew Woods provided an update on the Argentine wool clip (read more here). Compared to the Australian clip, Argentina
has a relatively smaller level of production, but lagging global demand is
contributing to the growth of their domestic wool stocks. Depending on the
category of wool, Argentina’s stocks are between 100% and 250% of annual production.
which puts further pressure on global supply in the current market.
Despite
Australian weekly bales sold averaging 20% lower than last season the continued
movement of wool through the system is a great sign (Figure 2). When the tide
does turn, and demand improves the supply chain and wool growers are better off
not having to liquidate excess stock which Argentina will have to do.
Next week
There is still a long way to go before we can be bullish on Chinese wool demand, however, there is a pulse, and wool buyers will be following the situation closely.
Next week’s offering is forecast to be 10% higher week on week, (34,459 bales). Fremantle & Melbourne are selling on Tuesday and Wednesday next week. The NSW public holiday pushes the Sydney sales back to Wednesday and Thursday.
This week’s wool market performance was a delicate balancing act, teetering between currency-driven gains and international headwinds. The Eastern Market Indicator (EMI) closed at 1,262¢,
Given the massive flooding in Queensland, the natural question is what impact will this have on livestock supply, and consequently prices? This article takes a
Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.
Wool market dragon is stirring
The Chinese Central Bank (PBoC) announced stimulus activities to assist the maligned Chinese property and equities market. What this means for the Chinese economy is the alleviation of some household pressures that have contributed to lagging Chinese consumption and production. More importantly for the wool trade, it’s a favourable result for the Chinese economy which underpins global wool demand and returns for Australian wool growers.
Competitive bidding returned to the auction room this week in Sydney and Melbourne with all merino micron price categories improving by double digits. In Sydney, the pass-in rate averaged 2.8%, and price gains ranged from 10-41¢ with 18MPG specifically improving 41¢ to 1483¢/kg. Melbourne price rises ranged from 10-46¢, with 21MPG 29¢ higher to 1261¢/kg. The result was the Eastern Market Indicator (EMI) rising 17¢ to 1104¢.
The Western wool market last week avoided declines and as such gains were minimal this week, the Western Market Indicator improved 2¢ to 1230¢/kg. Nationally 29, 748 bales were sold.
This week on Mecardo, Andrew Woods provided an update on the Argentine wool clip (read more here). Compared to the Australian clip, Argentina has a relatively smaller level of production, but lagging global demand is contributing to the growth of their domestic wool stocks. Depending on the category of wool, Argentina’s stocks are between 100% and 250% of annual production. which puts further pressure on global supply in the current market.
Despite Australian weekly bales sold averaging 20% lower than last season the continued movement of wool through the system is a great sign (Figure 2). When the tide does turn, and demand improves the supply chain and wool growers are better off not having to liquidate excess stock which Argentina will have to do.
Next week
There is still a long way to go before we can be bullish on Chinese wool demand, however, there is a pulse, and wool buyers will be following the situation closely.
Next week’s offering is forecast to be 10% higher week on week, (34,459 bales). Fremantle & Melbourne are selling on Tuesday and Wednesday next week. The NSW public holiday pushes the Sydney sales back to Wednesday and Thursday.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: Nutrien Ag Solutions, AWEX, AWI, Nutrien Ag Solutions, Westpac, Mecardo
Categories
Have any questions or comments?
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This week’s wool market performance was a delicate balancing act, teetering between currency-driven gains and international headwinds. The Eastern Market Indicator (EMI) closed at 1,262¢,
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Given the massive flooding in Queensland, the natural question is what impact will this have on livestock supply, and consequently prices? This article takes a
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
MEET THE TEAM
Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.