Last week the wool market took another backwards step. This was not unexpected, as reports of little business being conducted with overseas mills and/or at prices lower than that of current levels.
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A fall of the Australian to US dollar could not aid the sliding wool market. The Australian dollar to US dollar fell from 67.9 cents to 67.6c.
The AWEX Eastern Market Indicator lost 16 cents a kilogram and then a further 9c/kg on Wednesday and Thursday respectively to close off at 1530c/kg.
The West Australian indicator lost 15c/kg over the week to close off at 1640c/kg. In US dollar terms the EMI fell to 1035c/kg.
The market retraction flowed online to AuctionsPlus with only one line of crossbred fleece selling. This lot was a line of 26-micron fleece wool, with a low 0.2 per cent vegetable matter.
This lot was branded CORALYN PAST COY/G.T.H., offered by Jemalong Wool and sold for 800c/kg (greasy) or 1171c/kg (clean).
The current market hasn't seen positive growth since November 13. The larger quantities are no doubt seeing buyers spoilt for choice.
The Chinese New Year, which starts around January 25, will see the mills will close down for some 15 days. This coupled with the Australian Christmas and new year period is impacting demand. Any exporters without orders over this period will need to finance the wool until mills resume their processing.
Interestingly, the Chinese Lunar New Year is such an important holiday, that the Chinese Vice Premier Hu Chunhua, said the country must resolutely work to achieve the target of recovering pig production numbers, and stabilise their pork importing supply for the upcoming holidays.
On the wool side, there will still be speculators buying if they see attractive levels, however it is expected that the market will not rally with any significance in the short term.
Looking forward, there are three more weeks of selling before our Christmas break.
