Hype aside, market gains add up nicely
THERE have now been four selling weeks since the midyear recess and during that time the wool market could be described as a rollercoaster.
Over the past few weeks we have seen increased reporting on the highs of the wool market, thanks in part to SOME micron types surpassing price levels previously seen during the last wool boom in the late 1980’s.
Those who remain committed to the industry know that this is really only one side of the story; while the price being received at the moment is a stark improvement on where we have been for a long time, not much is mentioned about the increased cost of producing one kilogram of wool.
As is the case with any hype created around an industry, it doesn’t always tell the whole story.
Back to the market, and part of the reason I mention the past four weeks in sales is so we can look at things with a little perspective.
On the first day of selling this week we saw the market continue to follow the direction of last week, losing 20 cents to 30 cents across most categories for the day in Melbourne.
Interestingly, when we look at Sydney on the same day, superfine types were 40c dearer. This says more about the quality of the wool on offer, with Sydney traditionally having a larger proportion of highspec superfine types.
Fremantle had the week off last week so unfortunately the West had some losses to catch up on and ended up losing 100c to 120c for the day.
In eight selling days up until Wednesday this week some of the accumulated movements per micron price guide read like this: the 17-micron category is up 86c, 18 micron up 60c, 19 micron down 16c, 21 micron is up 38c, 28 micron up 87c and 32 micron up 39c.
So while the past couple of weeks have been disappointing, had we predicted a 4 per cent gain for superfine lots and an 11 per cent gain for 28 micron, I think most people would have been happy.
Changing tack slightly, I see the role of a wool broker as someone who can deliver market information (among other things) in a timely, unedited fashion to customers.
One topic that has been avoided to a point is mulesing and all that surrounds it. Not wanting to discuss the benefits of mulesing, that is a decision for individual farmers, but looking at how the market views wool declared as nonmulesed or ceased mulesing, we have recently done analysis to help determine what, if any, the price premium might be.
Looking closely at a Tasmanian clip sold last week and comparing that to the overall market for the week, the price premium was significant. I am not going to suggest this will be the case going forward, but right now there are a number of exporters and top-makers looking to procure commercial quantities of these wools.
Next week there are 43,000 bales rostered nationally with 39,000 the following week.
For any questions or comments send email to acalvert @robertsltd. com.au.