Smaller sale opens strongly
Last week's smaller 42,906-bale national wool sale finished 17c higher with better types in demand.
Australian Wool Industries Secretariat executive director Peter Morgan said the market had a positive lift with reports of inquiry.
"The market opened on a good note with gains driven by demand for the better types," he said.
"The market was steadier on Thursday when some buyers appeared to have filled their current orders and some of the competition eased."
AWEX said the Eastern Market Indicator gained 17 cents/kg clean to 1128c, and was now only 1.5 per cent below the 12-month peak reached in December.
"Volumes were down by almost 11,000 bales on the previous sale," AWEX said.
Elders said the positive movement was a result of Chinese mills wanting to have sufficient working stock for their return from the Chinese New Year break.
"Few participants believe the market will fall from the current levels and so are generally reluctant to sell their stock at the current price," Elders said.
"One or two top making mills do have excess stock and are offloading whenever an enquiry is available, but that is more likely to be a short-term cash flow issue.
"Orders from overseas to the processing sector in China have improved, however the domestic market is still very quiet."
Elders said cotton and plastic fibres all rose in recent days which added to the positive outlook.
"As the International Monetary Fund reiterated in the recent forecast, the world economy is recovering with some basket cases still evident, but overall they expect growth in 2014 to reach 3.7 per cent compared to 3 per cent in 2013," Elders said.
National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said China's wool textile industry would certainly benefit from improved economic conditions in the major wool-consuming countries.
"Especially if this leads to improved orders from retailers," he said.
"It will help boost its exports of wool products, which is desperate, from latest export data from China.
"For the 11 months of 2013 to November, China's exports of woven wool were down by 10 per cent compared to a year earlier."
Mr Wilcox said it was the third consecutive year China's exports of woven wool clothing had fallen.
"The good news is that China's exports of wool sweaters have staged a recovery in the past few months, up 4 per cent.
He said China's exports of wool tops had also staged a recovery, increasing by 12 per cent for 2013 to November.
Currently, 38,948 bales are rostered for this week's wool sales.
Present estimates for the following two sales are 47,941 and 51,077, respectively.
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