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Australian wool market continues downward trend this week

31 Aug '24
2 min read
Australian wool market continues downward trend this week
Pic: Adobe Stock

Insights

  • This week, Australian wool auctions saw a continued decline in prices across all wool types, with Merino fleece dropping by 25 to 35 cents and crossbred wools by 10 cents.
  • The AUD's strengthening against major currencies has made exports less favourable for international buyers.
  • Chinese buyers remain dominant, while demand from India and Italy has decreased.
This week, the Australian wool market continued its downward trend, with prices for all types and descriptions declining steadily. Merino fleece and skirting sectors experienced price drops of between 25 to 35 ac, while crossbred wools, cardings, and oddments saw a reduction of approximately 10 ac in Australian dollar (AUD) terms. Despite these declines, prices remained relatively firm when measured in US dollars (USD) for international buyers.

Machinery demand continues to be the primary factor influencing both prices and buying volumes, a pattern that has persisted over the past few months. Notably, the two major Chinese top makers have maintained a strong presence in the market, purchasing nearly a third of this week's wool offerings. This buying behaviour appears to reflect the current market conditions rather than an increase in the sale of wool tops, the Australian Wool Innovation (AWI) said in its commentary for week 9 of the current wool marketing season.

Towards the end of the trading week, Australia's largest wool trading house slightly increased its purchasing activity, returning to its usual position as the leading buyer. Meanwhile, its closest competitor maintained a steady buying pattern, placing in the top four across various wool types and providing essential competition to early-stage manufacturers.

However, the sluggish demand in the market is exacerbated by unfavourable exchange rates. The AUD strengthened by about 0.5 to 0.8 per cent against major currencies, making it more challenging for international buyers to favourably purchase Australian wool in local auctions, the AWI commentary added.

The finalised 2023-24 export data from the Australian Bureau of Statistics (ABS) reveals that China remains the dominant market for Australian wool, accounting for 86.4 per cent of the volume and 84.1 per cent of the AUD value of all exports. This represents a 4.7 per cent increase in market share by volume and a 6.4 per cent increase in export value. Conversely, exports to India have declined significantly, with a 22.5 per cent drop in both volume and value compared to the previous year. Italy, although purchasing a smaller volume, shows a preference for higher-value wool types, reflecting a 28.8 per cent decrease in volume but only a 30.3 per cent decrease in AUD value year on year.

Looking ahead, a lower volume of 33,000 bales is scheduled for auction next week.

Fibre2Fashion News Desk (KD)

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