DITTO again for the wool market last week with another 19 cents a kilogram being taken off prices in selling centres across the nation.
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Merino fleece, particularly the lower style lots which comprise the bulk of the current offering, eased by as much as 30c/kg and tended to drag other types along with them.
Despite continued good demand for knitwear products, skirtings and carding wools eased a few cents as did the crossbred sector.
A relatively volatile currency also did the market no favours with the Australian dollar climbing above US91c on Tuesday and Wednesday before falling to US90c by Thursday morning.
This fluctuation in the currency plays havoc with the wool exporter's pricing and tends to make importers in China even more nervous and reticent to purchase lest they end up buying wool which becomes expensive purely due to currency movements.
Many participants are confused about the continued downtrend in the market at present which is occurring despite falling supply and at the time of year when seasonal demand should be forthcoming.
Downstream processors at spinning, weaving or knitting stages are generally satisfied with the current level of orders.
However at the early stages of the pipeline, traders and topmaking there seems to be more resistance to buy.
This is in part being driven by the tightening credit situation in China where banks are becoming nervous about their exposure to industry in general, and the wool industry is a huge user of cash.
So importers of wool and topmakers are seeing their lines of credit tighten which is restricting the amount of wool they can hold.
The past 12 months has seen many of these firms lose money and now they are becoming more cautious about their activities.
Their bankers are heeding the warnings from Beijing about non-performing loans and organisations with no capacity to make repayments on some of the term debt which is currently falling due.
So a relatively easy way to repair the bank's balance sheet is to tighten lending criteria across the processing industry.
In previous seasons the importer or trading houses in China were happy to purchase large quantities of greasy wool from the Australian exporter and bring it to China.
They would then break down the large order into smaller parcels and sell on the domestic market.
With some of their previous customers turning to crossbred wools, knitwear types or simply going out of business some of this activity has definitely slowed.
Adding to their reduction in appetite at present is the pending arrival of the Chinese domestic clip, for which they must reserve some funds as this is transacted strictly on a cash basis.
So it can be assumed 2014 is a year of transformation for many in the Chinese early stage processing sector which is not surprising given the massive growth in recent years.
Practically every combing mill which has closed across the world has been transferred to China with very little retirement of existing capacity.
With the reduction in wool production from Australia during the same period an overcapacity has inevitably been created.
Downstream processors are able to alternate between different raw materials to a degree whereas the combing factory is specific to wool.
With the wider restructure of the Chinese economy and the end of the era of rapid growth a rationalisation is something which has to occur.
This is not to say there will be a crisis or major downturn by any means, but just a restructure in the way business is done.
Wool is currently attractively priced from a historical perspective and also when compared to other fibres which will encourage further consumption.
The ICAP futures market illustrates confidence in the longer term with the spot price being traded throughout the forward curve.
We may well see a shorter seasonal decline than in previous years given the low stock levels in the pipeline at present.
That is to say rather than waiting until September or October for the low point, we may see the demand start to build again as early as June.
This would correlate with the technical perspective which points to a timing signal about June which normally causes the market to change direction.
Obviously with the current downtrend occurring, the change in direction would be gratefully received.
The above scenario may well be thrown out the window should significant Chinese government stimulus appear in the form of uniform orders.
However at present the consensus in China is these will not be forthcoming for a while yet as Beijing concentrates on the larger elements of their well documented restructure plans in the financial and welfare systems.
Bruce McLeish is the wool sales manager for Elders.