THE wool market ended the financial year on a high bringing average prices to the second highest season-closing level on record.
Australian Wool Exchange (AWEX) market information manager Lionel Plunkett said the AWEX Eastern Market Indicator closed at 1297c/kg which was up 12c/kg on the week before.
“That’s a level which has been beaten only twice before over the past 12 months and was just shy of the season high of 1304c/kg,” Mr Plunkett said.
He said the overall market trend was spurred on by strong support in the medium and broad micron ranges.
For example, in the north in Sydney the 20-micron wools gained 27c/kg to hit 1462c/kg, while both 21- and 22-micron wool climbed 26c/kg. The 21-microns averaged 1449c/kg, while 22-microns, which were in limited supply, hit 1428c/kg.
Elders wool manager Bruce McLeish said taking a look at the 2016-17 season and beyond provides even more confidence with early signs showing we could be in for a sustained period of increasing demand.
Mr McLeish said with only two small auction weeks remaining before the three-week recess kicks in, the Australian market was also in a good place.
“Grower stocks, which flooded the market at the same time last year, do not appear to exist currently and with persistent rainfall interrupting or delaying shearing, the volumes available in the first half of July may be much smaller than the current roster indicates,” he said.
“Adding in the fact that virtually no combing mill has much greasy stock, and very few spinners if any, have much top stock it will be difficult for the market to ease by too much.”
Mr McLeish said demand from China for wooltop however was very low and topmakers who have tried to increase prices to reflect the currency devaluation last week had been unable to sell at all.
“So, the topmakers and greasy traders are being squeezed in a pincer like grip of low world greasy wool supply but a counteractive low demand for yarn and fabric at the other end,” he said.
That’s (1297c/kg) ... just shy of the season high of 1304c/kg
“Mills will reduce production as much as possible during this slow period, but they are unable to stop machines totally.
“Obviously after a three-week hiatus there will be somewhat of a scramble to refill the pipeline again in early August, but then the big question looms about price activity in August/September.”
Mecardo director Robert Herrmann expected a more settled week on international markets and a stable Australian dollar should see prices maintained this week.
“We do continue to hear murmurings about supply concerns into the spring and as such any increase in demand or a move to build early stage processor stocks could see the market push higher,” Mr Herrmann said.
Early this week the offering estimate for next week’s auction was 35,333 bales.
This was up 2.6 per cent on the previous estimate and may indicate a few more wool growers were prepared to take the plunge with their wool before the winter recess.