Wool market in fine form

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Bob GarnantThe West Australian
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The wool market traded in fine form last week, the benchmark Eastern Market Indicator lifting 10 cents/kg, after returning from its annual July three-week recess.

Elders agent Rob Young said the 13c/kg rise in the Western Indicator was one of the better opening results in several years.

Other encouraging news was from the economic front, with China's trade figures showing a rebound in July from declines seen in previous months.

National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said China's total exports were up by 5.1 per cent year-on-year, while its imports jumped 10.9 per cent.

"Some analysts are suggesting that this may be the first signs that the Chinese economy is stabilising after the slowdown in the first half of the year," he said.

Mr Wilcox said the US Labor Department was reporting that applications in July for unemployment benefits in the US fell to their lowest level in six years.

"This is very good news, reinforcing the recent gains in consumer confidence," he said.

"The strength in the US over the northern hemisphere autumn/winter will be vital in the demand outlook for wool."

Elders national wool manager Andrew Dennis said there was a sigh of relief from more than one market participant after last week's results.

"Of particular note was the strong competition in the superfine area of the clip with these micron price guides rising by up to 40c/kg clean, while medium wools stabilised and returned to a more normal basis," he said.

"The weaker but still volatile currency is adding some uncertainty to the mix, with the EMI closing up 10c/kg but cheaper in $US, down 14c/kg."

Mr Dennis said supply, or lack thereof, was quickly becoming a focus for the trade with reports from across Australia continuing to highlight a reduced production as a result of preceding dry period.

"The roster for the current week now stands at only 37,000 bales nationally, with Fremantle not operating in week eight," he said.

"This lack of supply should be significant enough to maintain current levels as the processing season is at a low ebb."

Mr Dennis said one of the reasons for volatility in the Australian currency was the better data coming out of China.

"The consumption power of such a large population does not disappear overnight and as the Chinese Government manipulates the levers of control, goods are required in massive quantities," he said.

Mr Dennis said recent reports suggested new uniform orders would be placed by November, which would be a significant boost to sectors of the processing trade.

"Reasonable demand from Asia is adding to the optimistic outlook from the European fraternity and providing a flicker of light for superfine growers," he said.

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