Strong open for wool sale

Countryman - - WOOL - Bob Gar­nant

Fre­man­tle’s 2019 open­ing two-day wool sale be­gan on Tues­day, and val­ues were 50 cents/kg dearer for Merino fleece at the start.

AWEX west­ern re­gional tech­ni­cal con­troller An­drew Rick­wood said Tues­day’s un­usual sale day rul­ing, a first, was di­rected by the Na­tional Auc­tion Sell­ing Com­mit­tee to elim­i­nate an iso­lated Mel­bourne auc­tion af­ter the ex­tended Christ­mas re­cess.

“It caught a few by sur­prise, but so far, the Fre­man­tle open­ing sale is run­ning smoothly, he said. “The mar­ket had opened rel­a­tively strongly on the first sell­ing day, with skirt­ings and fleece dearer.”

Mel­bourne was trad­ing up 2.5 per cent dearer, but had much fur­ther to go and Syd­ney’s trade was yet to be cal­cu­lated into the over­all na­tional mar­ket re­sult.

Scan­lan Wools buyer Steve Noa, who was ac­tive at the West­ern Wool Cen­tre sale, said the 50 to 60¢ rise in fleece wools was in line with the ris­ing De­cem­ber fin­ish.

“I’m quite con­fi­dent the fleece mar­ket will hold strong through the early part of this year, par­tic­u­larly with the low sup­ply is­sue,” he said. “Not only will sup­ply be tight, but the qual­ity of what will be on of­fer will put real pres­sure on the mar­ket.”

Mr Noa said there were plenty of ten­der, drought-af­fected wool over east. “Pre­mi­ums for the good stuff should re­ally blow out,” he said.

“The short wool mar­ket doesn’t look so good with re­ports of a fair bit of sound stock around.”

Mr Noa said volatil­ity would play out in 2019, with un­cer­tainty with world eco­nomics, trade wars, con­sumer spend­ing in China and the Aus­tralian dol­lar set­tling down.

“This will test wools’ re­cent re­silience, but at least we will be play­ing the up­per end of his­toric price lev­els,” he said.

The ex­cep­tional sea­son open­ing back in July had the East­ern Mar­ket In­di­ca­tor at 2056¢/kg and peak­ing in Au­gust at 2116¢/kg clean, but the wool in­dus­try was about to be hit with un­favourable sea­sonal con­di­tions. As drought con­di­tions es­ca­lated over east, the Aus­tralian Wool Pro­duc­tion Fore­cast­ing Com­mit­tee’s No­vem­ber fore­cast was for a na­tional fall of 10.8 per cent for the sea­son, to 305 mil­lion kilo­grams.

Com­mit­tee chair­man Rus­sell Pat­tin­son said while WA was ex­pected to fall slightly by 3.6 per cent to 62.7 mil­lion kg, it was the East­ern States’ drought con­di­tions that would drag down the sea­son’s na­tional sup­ply.

Wool Agency bro­ker An­drew John­ston said an over­sup­ply of fine wool was also in the fore­cast which would cause those val­ues to strug­gle. “On the other end of the scale, lesser sup­plies of broad wool would in­di­cate ris­ing val­ues for those types, while odd­ment val­ues would have is­sues,” he said.

“It was the odd­ment wools that were used in the trend­ing two-tier lin­ing, or dou­ble-sided gar­ments so pop­u­lar with Chi­nese con­sumers, un­for­tu­nately, they were made to last so re­peat buy­ing had slowed.”

Mr John­ston said the lower Aus­tralian dol­lar also played some part in the higher val­ues, but not overly. “Mar­ket volatil­ity would be ex­pected with China’s slow­ing eco­nomic growth be­hind is­sues such as the US/China trade war,” he said. Even with China’s 400 mil­lion mid­dle-class con­sumers, its slow­ing econ­omy was enough to slash Ap­ple’s smart­phone sales fore­cast.

“The ques­tion on many wool in­dus­try ex­perts’ minds is when will US Pres­i­dent Don­ald Trump and Chi­nese leader Xi Jin­ping re­solve their trade con­flict,” he said.

The mar­ket had opened rel­a­tively strongly on the first sell­ing day. An­drew Rick­wood

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