Strong open for wool sale
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