Europe tipped to reverse decline

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Bob GarnantCountryman
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The Australian wool market fell further last week with the Eastern Market Indicator finishing at 949 cents/kg clean.

AWEX said it was the first time the market fell below 950c since October 2010.

"The 46 cent drop came on top of the previous week's 67c fall, bringing the fortnightly cumulative fall to 113c (-10.6 per cent), the largest two-week decline since October 2008," AWEX said.

"It was the seventh consecutive trading day that the market had closed in negative territory."

Meanwhile optimistic that prices will not drop any further, the Williamson family of Williams were baling wool from their August-shorn wether flock to be sold at a Landmark sale.

"We shore 4000 wethers and the wool quality was off a tight summer," Mr Williamson said.

He said the main ewe flock shearing will begin in September and by then he expects the market will have improved.

Warren Miller of Landmark said the Williamsons' Gobabla clip was of consistent high-quality MF4 type (best top making).

"The 19 to 20-micron clip is very even and high yielding," Mr Miller said.

He said most of the classing work was done in the yards with Rod Norrish, of Angenup stud, Kojonup, assisting.

The Williamson family have been using Angenup bloodlines in their Merino flock for 27 years.

Last week's national wool market offered 40,404 bales, of which 31,068 were cleared to the trade leaving a 23.1 per cent pass in rate.

Australian Wool Industries Secretariat Peter Morgan said all wool types and micron ranges were affected.

"Most average Merino AWEX micron price guides were down by 3.5 to 4.5 per cent, taking the falls since the start of the season to 6.5 to 8 per cent for 17 to 18 microns and from 11 to 12 per cent from 19.5 to 23 microns," Dr Morgan said.

"The EMI is 314c below the same week last year, while the Western Market Indicator is 285c below its equivalent value."

Elders national wool manager Andrew Dennis said the majority of German processing mills returned to work this week after annual holidays and the Italians followed suit at the end of the month.

"As European mills begin to inquire about prices and look to book some forward orders, the Chinese will gain enough confidence to begin trading again," he said.

Mr Dennis said that while the high pass in rate was causing a build-up of stock in grower and broker stores, the amount of stock in wooltop, yarn and fabric was still quite low and within Europe in particular, very low.

The National Wool Council of Wool Selling Brokers executive director Chris Wilcox said there had been industry speculation that China's wool textile industry had been the catalyst for the fall in wool prices.

"The latest retail sales data for China released this week showed total retail sales grew by 13.1 per cent in July, compared to 17 per cent in 2011," Mr Wilcox said.

He said that while China's textile mills were facing a difficult export environment, it is estimated that 40 per cent of imported wool is used for the domestic market.

"Exports of wool woven wear are 15 per cent lower than a year earlier."

"In total, China's exports of wool garments for the 12 months to June were 11 per cent lower than for same period in 2011.

"Exports to Japan and South Korea have grown, but exports to Europe and the US have fallen," Mr Wilcox said.

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