Uncertainty cools market
Last week's 45,020 bale wool market finished 1.5 per cent lower, handing back the gains of the week prior, despite a lower Australian dollar.
It was the first Newcastle sale of the season which saw traditional Italian wool types sell with strong support, superfine wools up 20c on Tuesday and Wednesday, but Thursday was a reversal of fortune for the better-style lots.
Australian Wool Industries Secretariat's Peter Morgan said renewed concerns about a possible default by Greece led to a fall in global confidence, which reflected in lower wool prices against a fall in the US exchange rate by 3.6 per cent.
"Uncertainty led to a easing in wool prices in US currency," Dr Morgan said. "It was disappointing that the fall in global economic confidence happened after last week's good wool market.
"Prices were generally down across all fleece types other than those at 16.5 microns and finer."
He said fine wools came under great pressure later in the day on Thursday, with falls around 50c.
Landmark's Wool Weekly report said the latest Organisation for Economic Cooperation and Development (OECD) leading indicators pointed to a slowdown in world economic activity in coming months.
"Wool prices, and in particular fine wool prices, have moved in sync with the trends in the OECD leading indicators over the past two decades," Landmark said. "The downturn in the leading indicators suggests that wool prices in $US could weaken over the next few months."
However, Landmark said low world supplies of wool, in particular wool used in clothing, should moderate the extent of any slide.
Primaries wool manager Tim Chapman, who attended the Nanjing Wool Market Conference, said China, the biggest buyer of Australian wool, was in uncharted waters.
"It has never been in such a strong wool market before," he said.
Mr Chapman said the Chinese were treading water, hoping they could increase their wool intake on the back of more moderate prices. The US army had orders from China for its explosive division to change to a 100 per cent wool uniform.
"The US considers wool the best fibre for fire protection," he said.
Sales will be held in Sydney, Melbourne and Fremantle this week when 52,514 bales are listed for sale.
It was disappointing that the fall in global economic confidence happened after last week's good wool market.
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