Australian wool market sees strong gains amidst lower supply

Small increments were also drawn from buyers in the crossbred wools and carding segments, culminating in the most lucrative sale week for sellers in the last two months, the Australian Wool Innovation Limited (AWI) said in its commentary for sale week 1 of the ongoing Australian wool marketing season.

The underlying factor behind this upswing in the market was supply dynamics. It had been widely expected among forward sellers that between 100,000 and 110,000 bales would be available for the final two auctions preceding the mid-year recess. This estimate was based on longstanding seasonal trends, with no compelling reason for most operators to rush into the market and finalise commitments ahead of the July auctions.

However, local sellers, having resisted the comparatively low prices offered in the past two months, dramatically reduced the projected figure to just 80,000 bales to be sold in the two weeks of July. A significant portion of the withheld wool was merino, adding pressure on exporters, manufacturers, and overseas indents to meet their prompt delivery requirements. This unexpected turn of events prompted a swift strategic reassessment from participants, leading to a resurgence of full-scale activity and the subsequent appreciation of the market, the AWI commentary said.

Simultaneously, there were signs of renewed interest on the demand side. The rates offered on the limited volume of new business transacted during the week were markedly higher. Buyers from India and Europe were particularly active, demonstrating a keen interest in higher quality lots.

Faced with forward offer prices rising by over 4 per cent, many overseas users placed strong indents into the auction in hopes of achieving better spot buy-in levels. Chinese top makers maintained their positions at or near the top of buyers' lists, but it was the heightened activity from exporters that drove the upward trend in wool values, AWI added.

Looking ahead, a total of 44,000 bales are scheduled for sale next week before the market takes a three-week hiatus.

Fibre2Fashion News Desk (KD)