Wool prices surge on back of Chinese buying

Schute Bell Badgery Lumby southern NSW wool manager Ben Litchfield said there was strength across the board among Chinese processors, but that interest was definitely weighted towards the Merino end of the market.

"They is certainly coming back into the market in a vigorous way," Mr Litchfield said.

"There is a lot of competition at the 16- to 21-micron level.

"The crossbreds are still finding it hard to break away from the lower price pattern that they've now fallen back into, although as you get into better style crossbreds, high yielding types, and move a bit finer into the first-cross and the comeback lines, you start to see a bit more competition."

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Mr Litchfield said competition on the better presented lines was underpinned by preparation.

"The Merino end is showing a definite trend towards stronger purchasing on better class, better prepared, better presented types," he said.

Superfine, fine and medium types of clips are ending up in apparel wools in suiting material, fashion fabric material in sweaters, and in newer athletic products, which are being purchased by consumers in North America and Europe.

"Post COVID-19, the wool and consumer markets have had a little bit of a sugar hit from what they are calling 'event buying', including weddings and 21st birthdays - celebratory type events that were put on hold because of COVID-19 lockdowns," Mr Litchfield said.

"Now people are released from lockdowns and allowed to celebrate those milestone events.

"There's a feeling that has led the charge in a bit of consumer spending, particularly on fashion, apparel clothing and on suits."

Mr Litchfield said growers would be finding the wool market reassuring given sheep meat markets have come back from the heights of the past couple of seasons.

"Wool growers will be watching their wool money closely because they can see a bit of consistency, whereas the livestock market at the moment hasn't quite got that," he said.

NSW and Victoria continue to be the high producing states, supported by Queensland and Tasmania, averaging about 45,000 bales since Christmas.

"This week is the single biggest offering of wool since July 2022. The market has responded very well, hovering at a 97 per cent clearance rate and continuing the dearer trends seen last week," Mr Litchfield said.

Nutrien western NSW wool manager Frank Roberts said while prices had been steadily rising, this week they had surged.

"This week has created a bit of a bubble; we have had some nice rises since two weeks before Christmas, and it has been steady, whereas this week prices escalated, pushing the northern market indicator to 1475 cents a kilogram," Mr Roberts said.

"The 18-micron wool rose by 97c/kg, now it is up to 2100c/kg, while 21-micron rose to more than 1500c/kg.

"Sharp rises sometimes mean sharp falls, but there is confidence in the job."

Next week will see a three-day sale in Melbourne due to the anticipated number of bales.

This week saw just shy of 50,000 bales with more than that expected next week.

"The volume in the market since the beginning of the year has been huge, sitting around 50,000 bales which is a lot bigger than any other sale we had last year, especially consecutively," Mr Roberts said.

"The market has been handling those larger volumes, which is good.

"The word is that China doesn't have a lot of wool.

"So they will buy until they saturate themselves. Come next week, we will see if they are starting to level out or if they are still pushing."

Meanwhile, AWN's regional manager - northern NSW and Queensland Harold Manttan said Chinese processors were buying 80pc of Australian wools, but the top-end fleeces are heading for Italy.

Mr Manttan commented after a series of Merino and Poll Merino sales in the New England and Northern Tablelands, where buyer demand honed in on the super-fine and ultra-fine sires.

"Seventeen-micron wool rose 8c/kg last week with the price around 2353c/kg," he said.

However, historically, these prices have some distance to go before meeting prices just a few years ago. In 2018 these wools were making 3070c/kg, he said.

"In 1988, 19-micron wool was making $20/kg clean," Mr Manttan said.

"In 1991, Morris Tully from Armidale sold wool for 104,200c/kg."

However, Mr Manttan was confident that wool will continue to hold its value and growers will continue to keep up its production, despite the challenges of labour, particularly shearers.

AWN Langlands Hanlon's Geoff Rice, Parkes, was one of the auctioneers at the Armidale Housed ram show and sale last week and said flock numbers were beginning to approach levels held before the drought.

He said strong buyer confidence in the ultra- and superfine-sires was an indication there was still strong interest in breeding rams for that wool style.

"There are still shearer issues in regional parts of the state, but there were some absolutely beautiful sheep offered at ram sales last week and the market reflected that," Mr Rice said.