Wool shows signs of market recovery
Australia’s wool market is recovering despite woolgrowers’ reluctance to sell, leading to WA’s lowest weekly offering in nearly 25 years, with analysts flagging a renewed “fierce competition” among buyers.
The Eastern Market Indicator last week ended a month of steep falls to close 10¢ down at 1365¢/kg clean.
However, farmers remained wary of the volatile trading conditions and offered 21,694 bales nationwide to mark a reduction of 4726 bales week-on-week.
At Bibra Lake’s Western Wool Centre only 3036 bales were sent to auction, after 29 per cent of bales were withdrawn ahead of the sale, to record the State’s smallest sale since Australian Wool Exchange records started in 1995.
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AWEX senior market analyst Lionel Plunkett acknowledged the decline in offers but said buyer confidence was returning.
“In the Fremantle region during the last hour of selling, there was a noticeable change in the room, as fierce competition started to push prices back in a positive direction,” he said.
“This positive buyer sentiment carried on into the eastern centres on the second selling day, so much so that prices finally started to increase.”
Although the EMI slightly tumbled in Australian dollars, wool value firmed by US6¢/kg, or 0.7 per cent, to US931¢/kg clean.
Australian Wool Innovation trade consultant Scott Carmody said the market’s strengthening US value was positive.
“This is perhaps the first glimmer of demand slowly returning, albeit in some of the smallest offered quantities seen in spring for quite some years,” he said.
“The auction environment is being dominated at present by sellers exercising their right to withdraw wool prior to sale or passing their wool sale lots in if they fail to meet the price expectation of the grower sellers.”
Chinese buyers have shied away from Australia’s wool auctions in the past month amid the US-China trade war.
This week, 27,923 bales were rostered for sale across New South Wales, Melbourne and Fremantle.
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