THE market continued to go sideways last week with the overall indicator falling eight cents a kilogram, although it actually rose by 2c/kg in US dollar terms.
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Given that more than half of the offering was less than 19.5 micron and the majority of business being booked is 21- to 22-micron wool it is not surprising the superfine wools eased more than the medium and crossbred wools - a simple case of supply and demand in a free market.
Overall, the market is still bubbling along in the normal winter pattern, with processors and traders merely picking up selected stocks to fill the few orders they have, and making sure they have enough wool to keep machines running throughout the recess.
There is limited business available for the Australian exporter or Chinese topmaker at the moment, however, some Chinese government departments are reviewing inventory levels - after some forensic analysis from Beijing around their purchasing methods - and ordering new uniforms.
These tend to be at the cheaper end of the market (21 to 22 micron) rather than the more lavish purchases made in previous times when top-level bankers were dressed in 17-micron wool plus cashmere.
This is a direct reflection on the new austerity measures being driven from the top down in Beijing.
The underlying concept seems to be one of a government wishing to spend its constituent's money carefully, and remove the excessive, lavish spending patterns of the past.
Hence the uniform volumes are small, and for short-term delivery, nevertheless it is a positive sign that the long awaited uniform business is operating.
Overall, the Chinese economy is making the necessary adjustments as the Mandarins in Beijing seek to modernise their economy from a government consumption system driven by the huge infrastructure spending of recent years to a consumption based model.
While the government will avoid initiating any significant stimulus packages, it has indicated it is ready and willing to make further adjustments where needed to maintain progress.
A group of 45 growers and Elders staff are currently seeing first hand the Chinese wool processing and sheep growing industry in China.
The message thus far has been one of solid export business but subdued domestic orders.
It is quite obvious the processors have a commitment to wool and are optimistic about the future, however, current conditions are not as fruitful as anybody would like.
Knitwear types are certainly performing better than the traditional suiting industry, and some companies are evaluating new products in this sector with a view to diversifying from their previous single production focus.
Much work being done at a technical level with assistance from Australian Wool Innovation (AWI) to capitalise on wool's different usage properties.
Some of the different effects which are able to be created offer garments to the consumer that are a far cry from the traditional usage in men's suiting, but represent the new Merino fibre.
Wool traders are perhaps the most pessimistic group in China as their business model relies solely on volume turnover, which is currently difficult.
There have been some discussions about the relative price between superfine and medium wools at present and most agree this low basis will not last.
It would not be surprising to see the more adventurous traders/processors begin to take some stock of superfine wool, especially given the cashmere price remains so strong.
Everybody is looking forward to the new season with varying degrees of optimism and hoping there is not a surge of fresh stocks in the auction before the recess that will flood the market when it is delicately poised.
Overall one would expect the wool market would continue this sideways movement for the next four weeks until the recess providing that the volumes are in line with published rosters and that the currency does not appreciate significantly.
Bruce McLeish is the wool sales manager for Elders.