Wool market surge 'unusual'

The wool market surged 5.1 per cent, or 52 cents/kg clean, last week with strong competition from Chinese buyers.

Australian Wool Industries Secretariat executive director Peter Morgan said it was the largest weekly increase in percentage terms in the past 30 months.

"The Eastern Market Indicator closed at 1064c/kg and in US terms, the EMI rose by 4.6 per cent," he said.

Following from the previous week's steady showing, the 39,000 bale offering had only a 1.9 per cent pass-in rate.

Elders national wool manager Andrew Dennis said such a swift rise was unusual but not unheard of at this time of year.

However, he said it certainly brought about mixed reactions from buyers and processors.

"Some are simply filling previously sold orders, because deliveries need to be made in September, while other processing mills have taken the decision to build some stock ahead of the expected improvement in orders," he said.

"The remainder are sitting on the fence wondering what on earth is going on."

Mr Dennis said there was definitely no pull through of orders to create the action last week, not to say that it will not create activity in itself.

"At present most downstream knitters and weavers will want to wait and see if it will be sustained before committing to purchases in volume," he said.

Mr Dennis said positive economic news continued with the US recording a 2.5 per cent growth in GDP for quarter two.

"Europe will begin planning its next round of yarn and fabric shows and the busy September to November season to produce samples and trial orders which are drawing near," he said.

Mr Dennis said from a technical perspective, the market has been approaching a decision point with support levels rising to meet resistance levels.

"Often, a rise of this magnitude is followed by a week or two of consolidation before around 50 per cent of rise is 'given back'," he said.

"The general consensus of volatility over the next four weeks before an uptrend on the back of increased demand develops in October."

National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said China's 16 per cent increase in wool imports for the first six months of 2013 reinforced its strength in raw wool purchases.

Total offerings this week are 37,337 bales with Fremantle (5965 bales) selling only on Tuesday.