Elders manager upbeat on prices

Unusual price differentials resulted in last week's wool market when the AWEX Regional Indicators finished 2.2 per cent lower.

The last sales before the mid-year three-week break had the closing 22 Micron Price Guides (MPGs) above or equal to the 20 and 21 MPGs, according to Australian Wool Industries Secretariat Peter Morgan.

Dr Morgan said 19 and 20 micron wools were most affected, with falls in excess of 3 per cent since the previous sale.

"Nevertheless, growers were prepared to sell, particularly the skirting types, which were in keener demand," he said.

Of the 47,832 bales on offer, 42,629 bales were cleared to the trade.

Elders national wool manager Andrew Dennis said traders were only prepared to take on board types (21 to 22.6 micron) which can be easily traded over the break.

"Given the volatility around the world, taking on stock of finer types does involve risks," Mr Dennis said.

He said most businesses had funding constraints and they were more likely to sit and wait out the three week recess before committing to a trading position.

Mr Dennis said the outlook for wool prices over the next few months still remained positive.

"There will be a downwards trend during the early part of spring while the world economy gyrates."

He said anecdotal reports from China indicated its government had taken appropriate action to improve Gross Domestic Product figures.

He added that as the European retail selling season approaches in August, retailers will begin to place orders for 2013/14 season.

With the output of Australian wool expected to be the same as last year, with less production of medium Merino categories, Mr Dennis said while demand or lack thereof will be the ultimate driver of prices, lack of supply would also drive the market.

Wool sales will resume in the week commencing August 6.