Beware market porkies
THIS week marks the end of the second-last sale of the calendar year with all three centres operating on Wednesday and Thursday.
At the start of the week it was reported tensions between China and the United States were easing and exporters expected the market to tend dearer. By Tuesday reports said the trade negotiations were back to square one and the market opened the week cheaper with falls of around 10c/kg clean on Merinos.
To say our local wool market is intrinsically linked to talks at the G20 summit is a bit of a stretch but there is no doubt they created a degree of uncertainty. It also highlights the fact that even the major buyers can’t predict what the market is going to do five minutes before opening.
We have spoken at length about selection issues weighing on prices so no need to go into great depth again, other than to say poor specs were cheaper this week while better wools maintained demand.
The gap between the good and the bad grows further. This was highlighted by the fact the 16.5 micron price guide was the only one quoted dearer on Wednesday, up 38c/kg. AWEX reported this was driven by the high-quality Tasmanian selection with a high percentage of non-mulesed wool.
Crossbreds’ time in the sunproved short. After 28-micron types rallied 185c/kg over the past two weeks they dropped 51c/kg on Wednesday. Cardings dropped 13c/kg in early trade to 1168c/kg.
We have fielded a number of questions from growers about what the market is going to do in the new year.
It’s a fair and reasonable question, and one a wool grower should expect an opinion on from their broker. Of course, an opinion is very different to a prediction.
As I mentioned earlier, if the companies that set the market can’t predict it – then anyone who says they can is telling porkies . . . that they might get right half the time.
There is one comment I’d like to make: the theory there is no wool around so the market must get dearer is a bit thin as highlighted by the movements of the past 10 weeks.
We do know for certain an oversupply of high mid-break low-strength wools will continue until the end of March, at which time they will improve and yields and vegetable matter will deteriorate. We can use this to make informed choices.
As this is the last Wool Solutions column before the break, we’d like to wish Tasmania’s wool growers and merry Christmas.
Hopefully you can spend time with family and friends, stay safe on the roads and don’t forget to buy something woollen for a loved one.
Email any questions to [email protected]solutions.com.au. a safe