AS EXPECTED the wool market in Australia traded sideways last week with less orders from China, but balanced by a smaller offering of only 32,000 bales being put in front of the trade.
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The Eastern Market Indicator (EMI) managed a gain of four cents a kilogram for the week, however most of the gains were at the superfine end of the clip which bodes well for next week's designated superfine sale in Sydney.
A relatively stable currency market meant the Australian/US dollar traded within a tight 100 point range during the course of the week which would have been a welcome sight for international buyers.
Carding wools and other knitting types such as pieces and premium fleece continue to sell very well.
Australian Wool Innovation (AWI) highlights that positive recent trends in knitwear continue across the latest fashion shows in Europe with designers continuing to offer "heritage" fashion but in modern lightweight creations.
In order to produce the bulky yarn required shorter wools are being used, however the new "shetland" product is now made from Merino rather than the traditional 25- to 27-micron lambs wool of the past in order to enhance the product's softness.
Despite an overall stable currency market, international equity and risk markets were volatile during the past 10 days.
Worrying signs developed early last week with some of the emerging markets (Argentina, Turkey, South Africa) with many central banks forced to increase interest rates sharply to prevent further currency devaluations.
As the US Fed Reserve winds back its stimulus program there is perceived to be less "easy" money flowing to these emerging markets.
Coupled with some less than exuberant manufacturing data from China allowed the bears to create a little havoc across the globe.
Turkey is an important cog in the textile machine with many European manufacturers having suppliers or customers in that country.
Spinners and weavers in Turkey have faced an uphill battle with a lower currency meaning the imported raw material costs more, and now interest rates being hiked by five per cent to try to stabilise the currency.
However as AWI pointed out in its recent newsletter, the strengthening US economy is a positive development for the wool industry.
Given that the US represents 22 per cent of global gross domestic product (GDP) by itself, a strengthening US economy is welcome news for everybody in the manufacturing scene.
Consumer spending or personal consumption in the US is now expected to increase by 3pc year-on-year which will add an additional $US342 billion to the cash registers across the nation.
Although textiles only represent a small percentage of consumer purchases and wool is less than 2pc of this figure, the increased purchase of woollen products still amounts to a significant number.
Bruce McLeish is the wool sales manager for Elders.
