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Market pressure mounts as Australian wool auctions see price falter

02 May '24
2 min read
Market pressure mounts as Australian wool auctions see price falter
Pic: Adobe Stock

Insights

  • Prices at this week's Australian wool auctions experienced widespread declines across various types and descriptions, attributed to subdued buyer actions compared to previous weeks.
  • The strengthening of the Australian Dollar against the US Dollar and the completion of April shipment orders further dampened demand, leading to a negative market reaction.
This week's Australian wool auctions witnessed a significant downturn in prices across nearly all categories and descriptions. What once seemed like a fervent buying atmosphere in recent weeks quickly gave way to subdued buyer actions as the auctions commenced. The market, which had relied heavily on the active participation of larger exporters and manufacturers, found itself grappling with diminished enthusiasm.

Adding to the market's woes, the Australian Dollar (AUD) strengthened against the US Dollar (USD), reaching mid-0.65 levels and beyond since the previous week's close. This surge in the AUD/USD exchange rate contributed to a decline in immediate demand for shipments and a notable absence of fresh orders for future contracts, the Australian Wool Innovation (AWI) said in its commentary for week 44 of the current wool marketing season.

The completion of traders' forward orders for April shipments further compounded the situation, affording exporters a brief window for strategic purchasing to fulfil their May shipment requirements. Consequently, purchasing pressure eased, leading to a downward spiral in market prices. However, amidst the price drops, Chinese top makers and indent buyers stepped up their purchasing activities, the AWI commentary added.

Despite the overall market downturn, the fine and medium wool Merino sectors remained relatively sought-after amid challenging conditions for sellers. Prices for these wools saw reductions of around 5 Australian cents at the broader end (20.5 microns and above) and up to 20 Australian cents for the 19 to 20.5 micron range. Super fine Merino wools (<18.5 microns) continued to face difficulties, experiencing losses ranging from 25 to 40 Australian cents. Crossbreds saw a slight uptick in prices, while cardings and skirting types witnessed declines of 10 to 15 Australian cents.

The upcoming week is poised to feature over 41,000 bales slated for sale on Tuesday and Wednesday.

Fibre2Fashion News Desk (KD)

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