Wool market down after large offering
The wool market was due for a correction and last week's large offering of 48,862 bales caused a 33 cent easing in the AWEX-EMI, reversing the strong gains of the previous weeks.
Elders national wool manager Andrew Dennis said given the previous large price rises followed by a sudden increase in volumes, it was going to be nigh on impossible for the market to sustain itself.
"No market, wool or any other commodity, can continue to rise week after week without some sort of correction and consolidation," he said.
"Overall the market eased by 33 cents in local currency terms, although with a stronger Aussie dollar the market only fell by 13 US cents.
"Most of the movement was in superfine and medium Merino fleece, with skirtings, oddments and crossbreds affected to a lesser degree."
Lake Grace woolgrower Chris Harvey offered 94 bales of his 21.5 average micron Ormidale wool clip last week.
Australian Wool Industries Secretariat executive director Peter Morgan said the Eastern Market Indicator was still 83 cents/kg clean above the level prior to the start of the increase two weeks ago and is at its highest level since mid-March earlier this year.
Encouraged with one of the better seasons in years, Mr Harvey was pleased with his seven-bale line of 22.1 micron selling in the Elders catalogue to a top of 798c/kg greasy.
"Prices were much better this year and sheep feed is at its best in over 40 years," he said.
Although the Ormidale clip was quite even, just over half of Mr Harvey's bale offering was passed in with three lines not finding bids above evaluation.
Mr Harvey said this was a result of a fluctuating market.
National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said the roster for last week jumped by almost 9000 bales, or 22 per cent, in response to the significant lift in prices over the previous two weeks. "As well, the market would not have been helped by the lift in the $A against the $US by around 1.5 US cents," he said.
"The EMI fell back 3 per cent, to 1095Ac/kg, giving back 126Ac/kg gain seen in the previous two weeks.
"I am still confident that demand and prices will improve in October and November, on the back of steadily improving economic conditions in major markets, once the spring flush has passed."
Mr Dennis said with a large number of exporters, traders and processors gathered in China for the annual Nanjing Wool Market Conference, it would be very unusual if there was not a reasonable amount of business transacted.
"Milan and Paris both feature on the textile event calendar this week as the fashion creators exhibit next year's collections," he said.
Mr Dennis said positive sentiment based on the improving European economy and a base load of business transactions in China should see the market stabilise around current levels.
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