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Wool prices have been rising with shrinking supply and strong demand. Prices got a further boost to record levels with the falling Australian dollar, $AUDUSD traded down as low as US74.24c the lowest level since June last year.

Wool Classing

A lower Australian dollar helps Australian exporters as it makes the commodity cheaper and therefore more attractive to buyers. The wool market jumped immediately with the lower exchange rates and a relatively light offering of only 38,000 bales.

In the current market the traditional Chinese Type 55 (21-micron full fleece) is one of the most sought after types of wool being ordered by Chinese indent operators or processors. The AWEX pre-sale data issued on Monday showed there were 3070 bales of 21-micron wool available in total, and with the current VM profile of the clip probably 60 per cent of these wools would be excluded for high VM or low yield, position of break..

Spreading 1200 bales across the 10-15 major topmakers in China looking to produce some Type 55 wooltop in four to six weeks time doesn’t fill the machines for many hours, hence the scramble for wool. Concerns about supply over coming weeks, which is not particularly new and should not be surprising, helped push the market to new record levels in many categories The Land reported.

Concerns about supply over coming weeks, which is not particularly new and should not be surprising, helped push the market to new record levels in many categories. - Bruce McLeish, Elders

Superfine wools moved upwards by 60c. Medium Merino continues to be the most sought after category at this time of year. There was an unprecedented clearance rate of 98pc at their Thursday sale.

AWEX’s northern market indicator closed up 48c on 1940c. The 17 micron indicator closed on 2771c, 18 micron 2389, 19 micron 2154, 20 micron 2074c, 21 micron 2044c, 28 micron 999c, and 30 micron 703c.

The suppy squueze is expected until August as there is less than 40,000 bales weekly until the last week of June. Traditionally August becomes a diiffcult greasy wool sale with Italy and most of Europe shut down for summer holidays. There has been a trend  for trade fairs being held in July which brings customer orders for greasy wool earlier potentially.

The increasing importance of China as a consumer market, is reducing some of the seasonality of demand from the past.  Chinese demand for medium Merino at this time of year has been seen before, and can disappear as quickly as it arrives. The Land noted last August  the fake-fur product frenzy create a 100c rise in 21-micron wool over two weeks, which then completely dissipated again over the following three weeks.

Current market not being driven by any single product  but certainly being driven by Chinese mill’s appetite for medium Merino.

Fine wools are just moving in sympathy, but not creating new highs (in US dollar terms). Rather they are back within their ‘tidy’ upwards trend established back in September 2015, having briefly broken out to the high side in January this year.

The medium Merino segment is having a run at present but some of the largest users, suit fabric manufacturers are facing severe price pressure, and their maximum purchase price is nowhere near the current greasy market. Recent sales, which indicate not only where the spinners are prepared to purchase, but also where the topmakers are prepared to sell are in fact closer to the futures market in the spring. In the short term, while the supply pressure remains it is difficult to see the market going anywhere but up. All these predictions could of course go out the window if the currency changes significantly. - The Land

Source: The Land

From a Sunburnt Country

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