AS THE saying goes, "Beware the Ides of March". However, in the case of the wool market it should be "Beware the Ides of May".
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This week saw another lacklustre performance in the wool market across Australia with the market easing by 26 cents a kilogram.
With a stable currency market for a change the fall in US dollar terms was similar at 23c/kg.
All Merino fleece categories eased by similar amounts. However the lower-yield, faulty wools showed considerably higher discounts compared to the more stylish wools as has been the case all season.
Crossbred wools finished relatively unchanged in price, as did the carding wools.
As expected with a relatively large price movement the pass in rate rose significantly to 18 per cent whilst a further 5pc of the catalogue was withdrawn prior to sale.
Given the current low volumes of new wool receivables' into stores across the country, sale volumes are expected to remain below 40,000 bales per week for the remainder of the season that will prevent the market from moving much lower.
Current operating capacity of early stage processing machinery around the world requires somewhere in the order of 30,000 bales to maintain production so the supply and demand equation is more or less balanced at present.
New enquiry for greasy wool or wooltop from China continues to be lacklustre as the processing season winds down and only small volumes of new business are written.
It would appear that the Chinese government is taking further action to support the manufacturing sector that will in turn improve consumer confidence in the longer term.
Chinese export orders of both knitwear and woven products both continue to improve monthly as do the volumes of wooltop sent overseas.
The domestic production for apparel remains hampered by a lack of consumer confidence and is certainly on the radar in Beijing.
However the longer-term goal of modernising the economy is central to policy settings provided the wheels do not fall off.
A recent report from HSBC titled China's challenges: daunting but not unprecedented highlights the fact that the task facing the leadership in China is difficult but arguably much easier than the one it faced in the 1990s.
Higher domestic savings, a small fiscal deficit, huge reserves, a stable inflationary environment as well as the wisdom of experience should mean that the Mandarins in Beijing can achieve their stated goals in the not too distant future.
With the US economy continuing to move ahead, albeit slowly and the German led recovery in Europe on track, Chinese exporters should have enough business to maintain current production.
Whereby prices will find support around current levels, perhaps gain a little in through June before starting to rise again when demand increases in spring as the new processing orders come to the market.
Operators in Korea and Japan are currently satisfied with yarn and fabric order books, and whilst they do not require much in the way of new raw materials, the fundamentals for next season appear sound.
Superfine Wool: European interests continue to support the most stylish lots offered each week, however the lower quality superfine wools will remain on the sidelines.
Medium Merino: With prices for 19- to 22-micron wools identical in all market centres across Australia at the end of sales this week a base appears to have formed in the market.
A lack of alternative sources of supply around the world will divert more orders to the Australian auction that should be enough to maintain current levels in the short term.
Crossbred Wool: Shrinking supplies both sides of the Tasman will maintain current prices, but a return to confidence in China is still required for these wools to lift significantly.
Bruce McLeish is the wool sales manager for Elders.