Australian wool market struggles amid lower auction volumes

Over the past few weeks, confidence has dwindled in the market, causing a self-perpetuating negative spiral. Currently, the absence of a clear directive from overseas trading partners is catalysing reactionary price behaviour, the Australian Wool Innovation Limited (AWI) said in its commentary for sale week 47 of the ongoing Australian wool marketing season.

However, there was a ray of hope from this week’s activity as China's largest top maker not only maintained but increased its usual weekly percentage of purchases, particularly in the Merino fleece sector.

Contrary to the current greasy wool auction results, apparel sales in key global markets, including the US, Germany, South Korea, Italy, and France, are making a strong rebound. These markets are witnessing sales well above the levels seen in 2022 and also exceeding the pre-COVID influenced years. However, the traditional and voluminous suiting market in Japan is still lagging behind. In China, retail garment sales are showing a robust rebound with both March and April 2023 sales comfortably outpacing 2022 numbers and even surpassing pre-pandemic levels, the AWI commentary said.

While recent price degradation might be concerning, the consistent demand signals a promising long-term outlook. Shipping containers are still steadily moving to manufacturing destinations, which signifies that upstream users continue to appreciate the value and benefits of Australian wool. However, the spot price is currently struggling, reflecting the effort to clear the backlog of the supply chain, especially at the greasy and wool top level, AWI added.

There are 47,000 bales on offer next week, with sales being conducted over 3 days, Tuesday through to Thursday.

Fibre2Fashion News Desk (KD)