Sydney's solid seasonal start

Sydney's solid seasonal start | Wool Wrap


News
Aa

The Australian wool market opened the new selling season on a much more positive note compared to the final few weeks of the previous season.

Aa
Superfine Merino fleece of the correct specifications recorded solid European interest last week, and a better quality Sydney catalogue was well supported by all of the trade.

Superfine Merino fleece of the correct specifications recorded solid European interest last week, and a better quality Sydney catalogue was well supported by all of the trade.

The Australian wool market opened the new selling season on a much more positive note compared to the final few weeks of the previous season.

Following a "hand-shake" agreement on the sidelines of the G20 in Osaka between the leaders of US and China to reopen negotiations around the trade war issue and halt further implementations of tariffs a more enthusiastic tone was evident.

Despite some commentators viewing the outcome as not a lot of change, for many in China in particular it was enough to signal a return to more normal operations.

This, plus the need to cover the upcoming recess, and next week having almost 30 per cent less wool on offer compared to the corresponding sale last year, made sure that the market was positive.

The colour change on the AWEX report from Red to Green was welcomed by all and sundry as the trade in greasy, scoured, tops and yarn had hit the proverbial wall in June.

After a bit of a spluttering start on Wednesday last week where buyers remained cautious and most types were sold at similar levels to the previous week, the recovery gained pace on Thursday and most Merino fleece types added 20 to 30 cents a kilogram.

At the close of play the Eastern Market Indicator had gained only 8c/kg for the week, or US13c/kg and 18 Euro cents, but the overall tone was much better and continued right through to the final catalogue of the week.

Superfine Merino fleece of the correct specifications recorded solid European interest, and a better quality Sydney catalogue in particular was well supported by all of the trade.

Medium Merino fleece was stronger again, although the fact that AWEX could only make a nominal 21-micron quote in Melbourne and Fremantle, with no quote in Sydney at all summarises the season that was.

The trade breathed a collective sigh of relief after seeing the market recover some ground last week, and although there was not a huge volume of follow-on business being done, there was enough for most to agree that the market had bottomed out.

Volatility in the wool market is a constant, and we are certain to see plenty of ups and downs in coming months, but it is always nice to enter a recess period on a strong note.

Gone are the days when certain nations, or large corporates would "push" the market just prior to a break in sales, purely so they could continue to trade over the break. Nowadays with mostly smaller companies in the game, tight financial constraints and genuine competition being the norm, the market manipulation antics are long past.

A free market like we enjoy is apparently not happening in Lesotho this year in regards to wool and mohair.

A petition of sorts has been instigated, directed to the IWTO highlighting the plight of sheep and goat farmers in Lesotho who have this year been forced to sell their product to a single trader rather than through the auction in South Africa as usual.

Rather than being paid on normal auction terms and with full international competition on their fibre, the only licensed trader has been allegedly rather slow making payment, sending many of these small farmers to the wall.

There would no doubt be a very large outcry in any other developed market if a similar situation arose.

Trade issues apart from the US-China one obviously do exist. The wool industry has its fair share of difficulties with different facets, and traders and exporters holding wool in South Africa are still doing exactly that - holding wool.

None of the wool destined for China has actually been shipped at this point, despite China agreeing to its import several weeks ago.

The South African veterinary authorities, it seems, cannot agree on the correct form of paperwork to allow the export of this wool.

Aa

From the front page

Sponsored by