Wool buyers get a tad over exuberant on first day of selling

Wool buyers get a tad over exuberant on first day of selling

The wool market was very solid last week, with a jump of 50 cents a kilogram fairly well across the board on the first day of selling.

The wool market was very solid last week, with a jump of 50 cents a kilogram fairly well across the board on the first day of selling.


All is well in the wool industry again it seems.


All is well in the wool industry again it seems.

The market was very solid last week, although perhaps getting a little over exuberant on the first selling day with a jump of 50 cents a kilogram fairly well across the board.

The Thursday auction brought a little more circumspection to the trade and AWEX called it unchanged in the east, with the volatile western market jumping up and down in the corner to attract attention and so broke ranks to ease by 20c/kg.

Overall everyone was pretty pleased with the outcome and whilst the market may come down just a tad next week, the overall tone of the market for the next couple of months seems to be positive at last.

Of course, we could still get ''trumped'' if there is a blow-up on the world financial and/or political scene, but barring that it should be fairly smooth sailing from here into the new year.

The retail fraternity is reminding us, with no subtlety at all, that Christmas is fast approaching.

For the wool industry here in Oz that means every wool grower will start shopping online for pure wool garments to give to family members for Christmas presents to help promote the wonderful fibre that they produce.

How an Australian wool grower cannot wear Merino wool given the plethora of different garments now available is beyond comprehension - a bit like a vegetarian beef farmer.

And yes, some of the bricks and mortar retailers do not stock much wool, especially at this time of year, so one often has to head online to source Merino polos, business shirts, underwear or the new boardies.

Shopping online does not present the scary, difficult experience it previously did, so hopefully, every wool grower in Australia will get on the keyboard to help drive the recovery in demand for the fibre that they produce.

But for the exporting and processing industry, it means that the countdown to the recess is becoming a factor as mills manage their inventory over the break in sales.

The issue of Chinese quota has not been discussed at this point, as it is certainly not in short supply this year, but nor is the usual 'use it or lose it' scenario being mentioned yet.

That could become a factor later in the year, or perhaps quota has become just a side issue in the survival mode that many processors have been struggling with over the last six months.

Early stage processors are reporting on again - off again demand coming back down the pipeline at present.

Spinners are struggling to establish the new yarn price, which is not that surprising when you look back at the greasy wool prices over the past three months.

For someone who is discussing yarn or fabric orders with a customer either has stock that is very overpriced, or looking a long way into the future trying to work out where the price of greasy wool will be, is more than a little uncertain based on recent events.

The futures market is experiencing very thin trade at the moment, to say the least, but does provide an opportunity for growers and processors to lock away prices and remove some risk.

Given the instability and spasmodic nature of business at present, only by placing GTC orders and leaving them on the screen, is one side or the other likely to get set.

Nevertheless, some processors are obviously able to sell product into the new year, and some growers have been able to hedge forward production still walking around the paddock at levels pretty close to the current spot price, or even slightly above in the last week.

So, as more name brands place orders for knitwear - in relatively small tranches - the processing fraternity feels a bit more comfortable to continue to refill the pipeline.

Despite all the angst floating around when the market was plummeting or violently rebounding it now seems like it has settled and the mood in the industry is returning back to normal.

European participants are still shaking their collective noggins at the antics that have gone on, and are wondering why it had to get quite so volatile.

Previous corrections have been much more controlled or stable affairs, but given the backdrop of world events, and probably the small size of the industry nowadays, we witnessed the huge swings in price as we corrected, then (hopefully) came out the other side.

Of course, having a concentration of the industry in China where the economy has been contracting as well as being in the midst of the trade war has added more than a little to the volatility.

The number of affluent, environmentally aware consumers who are being converted to the love of wool by emerging designers in China will far outweigh the perceived problems caused by the concentration of the processing industry.

Some of us in the antipodes have never heard of designers such as Angel Chen or Ban Xiaoxue, but when they have a target market of 1.3 billion in their home country why would they need to advertise in the rural press in Australia.

As was the case 30 or 40 years ago, many of the names in the current International Woolmark Prize will go on to become household names in the textile industry.

Scanning the list now may not create a lot of recognition for the average wool grower, but ask a Millennial or wait for a couple of years and it will be surprising to see the number of this competition's finalists that ''make it'' in the industry.

Whether that is because the competition is so well run, or because the fibre they work with is so inspirational, who knows, but it is a great vehicle for promoting the fibre and getting people to aspire to owning a Merino garment.

And aspiration is one of the most important aspects in the wool conversation if we are to lift the farm gate price - and keep it there, rather than the boom and bust cycle of recent times.

The story Wool buyers get a tad over exuberant on first day of selling first appeared on Farm Online.


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