Prices down over lack of Chinese inquiry

The Australian wool market continued to fall last week because of a lack of Chinese business inquiries and a rising US exchange rate.

Australian Wool Industries Secretariat executive director Peter Morgan said the Eastern Market Indicator fell 29 cents to 1006c/kg as the US exchange rate rose to finish at 92.39c last Thursday.

"Trade reports continue to describe a lack of business inquiry from China and the markets being led by the indent buyers," he said.

"The market was not helped by the 2.4 per cent increase in the US exchange rate, which transformed a fall of 5c in the EMI in US currency into a fall of 29c in Australian currency."

The Landmark Wool Weekly report had limited volumes of 18.5 micron wool and finer in Fremantle drifting down 10c to 15c, while heaviest losses of around 25c/kg were recorded for the 19, 20 and 22 micron categories.

Pingelly woolgrower Adrian Fairhead, who offered up his family's annual woolclip last week through the Landmark catalogue, said he was disappointed with the wool market.

While most of their K&EF/PG-branded wool was passed in, a six-bale line of 22.3 micron fleece wool shorn from pure Merino hoggets sold for 681c/kg greasy.

After years of running wethers and first-cross Merino/Prime SAMM ewes, Mr Fairhead said he decided last year to breed pure Merino sheep to improve wool quality.

"We secured 16 Poll Merino rams from two prominent studs in 2013," he said.

Mr Fairhead said while wool was mostly undervalued, sheep prices remained strong.

"I recently sold lambs bred by crossing White Suffolk rams over first-cross ewes for $120," he said.

"In spite of today's market, the future of the wool market still seems to be OK."

The National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said the wool textile industry was not the only market to be affected by weaker demand from China.

He said market intelligence company PCI Fibres had viewed China's textile market as winding down since late 2011, in response to consumer demand and as tighter monetary policy restricts small to medium textile manufacturers.

Mr Wilcox said China's slowdown had affected prices for synthetic fibres as well as all other commodities since late 2010.

"Natural fibres (cotton and wool) have performed relatively better than synthetic fibres (polyester) over a nine-year period, from 2005 to present," he said.

Mr Wilcox said wool prices had experienced distinct ups and downs in the past three years, but were now steadily on a down-swing. He said: "The question is, once prices swing back up, will they break out of the longer downward trend?"

This week, 40,098 bales are rostered for sale, with 39,400 and 43,200 bales estimated for the following two sales, respectively.

Thursday, March 27 *

AUCTIONS *

Australian Wool Exchange *

Western Market Indicator: *1022c/kg (-36)

Western region

(Micron indicator quotes c/kg clean)

Eastern Market Indicator: *1006c/kg (-29)

Southern Market Indicator: *995c/kg (-28)

Southern region

(Micron indicator quotes c/kg clean)