AUSTRALIA’S auction wool market held steady this week following the lifting of China’s ban on raw wool imports from South Africa initiated after a Foot and Mouth Disease outbreak.

The Australian Wool Exchange said the market recorded no overall movement for the second consecutive series.

“Due to a lack of quantity in the west at this time of year, the Fremantle region did not require a sale and as a result the national offering fell by 7355 bales to 37,431 bales.

“The smaller offering attracted continued solid buyer support, and the prices on offer for Merino fleece types were generally in line with those of the previous series,” AWEX said.

“The only real holes evident in the market were for 17-18.5 micron wools in the south.

“The weakening in this section was reflected in the individual Micron Price Guides (MPGs) in Melbourne, which in this range fell by between 5 and 36 cents.”

AWEX said these falls were the driving force behind the 3-cent loss in the southern indicator for the week.

“In the north, the movements in the Merino fleece MPGs ranged by between -8 and +9 cents.

“The 3-cent lift in the Northern indicator completely offset the loss in the south,” AWEX said.

The result was another unchanged AWEX Eastern Market Indicator (EMI) which again closed the week at 1342 c/kg clean.

In a similar pattern to the previous series, due to a weakening Australian dollar — the A$ dropped by a further US0.42 cents since the last sale — the EMI lost ground when viewed in US dollar terms.

The US$EMI dropped by US6 cents, closing the week at US926 cents.

AWEX said the oddment sector was the strongest performer for the week.

“General rises in locks, stains and crutchings of between 5 and 20 cents, helped to push the two Merino Carding (MC) indicators up by an average of 12 cents.”

South African ban end was determining factor – AWI

Australian Wool Innovation trade consultant Scott Carmody said the foreign exchange rate movements took the US$ prices down just slightly.

”Conversely, the Chinese renminbi had wool prices in that currency heading towards 1pc dearer, despite the relatively unchanged local indicators.

“A large jump in the Euro v A$ saw a more expensive buy-in level for imports into Europe,” he said.

“This 2pc increase took the prevailing push and urgency out of the market for the better quality lots and resulted in flatter price levels.”

Mr Carmody said the headline market price determining factor this week was overwhelmingly the announcement that China had lifted restrictions on the import of wool from South Africa.

In April this year, China imposed an import ban on South African wool following outbreaks of Foot and Mouth Disease in parts of the country. The South African wool industry had measures in place to protect the wool and no outbreaks of FMD had been recorded in major wool-producing areas. About 75pc of South African wool was being exported to China prior to the ban.

“There was already a sharp fall in prices at the recent first auction of South Africa’s ‘s new wool season and many trade commentators cited the Chinese ban as the predominant reason.

“An even greater impact was expected if the Chinese ban had remained in place,” he said.

“It is expected a few weeks of global auctions will be necessary to establish price trends and demand under the full market participation regime.”

China’s largest top maker led the way on buyer’s lists this week with strong support from Australia’s biggest wool trading house and a key Chinese indent operation.  Next week is a designated superfine sale week with 39,000 bales on offer.

Fremantle returns to the market next week, bolstering the national offering. Currently, there are expected to be 39,192 bales on offer in Fremantle, Melbourne and Sydney (a designated Superfine sale).

Sources – AWEX, AWI.