Prices fell at the southern wool market on Tuesday, particularly for broader and poor specification types.
But agents were quick to call it a “market correction”, after these medium to broad Merino fleece wool had increased by 100-150 cents a kilogram clean for most types in the first two weeks back after the Christmas break.
The Australian Wool Exchange (AWEX) reported better types of stylish and strong (40 Newtons per kilotex (Nkt)) in the 15-17 microns range remained firm. Elsewhere prices were 20 to 30 cents clean cheaper, and the fall bigger towards the broader microns. on Tuesday, the southern indicator fell 21c/kg to 1366c/kg.
Landmark’s south east wool manager Stephen Keys said at the Melbourne wool market (which was bought forward to Tuesday, due to the Australia Day public holiday), generally wools of 19M and finer and of better style sold fully firm on recent sales; which had skyrocketed since the break. AWEX reported 17M wool increased by 140c/kg in the week ending January 13 and by 71c/kg last week. Mr Keys said as such, wool prices were still “...well above pre-Christmas levels”. The prices are also much higher than a year ago, with 18M having risen by 338c/kg (or 22 per cent) from 1527c/kg to 1865c/kg yesterday and that increase tapering off for broader types.
Mr Keys said the lower prices were a “market correction”, after the market having overheated in the past two weeks, as overseas mills were keen to shore up supplies after the three-week Christmas break. “I don’t think there’s a lot of downside in the market, with smaller quantities on offer in coming weeks.”
Mr Keys said exporters had said higher prices would be sustained by the high demand from their fashion and apparel clients. Arcadian Wool’s Ian Shawcross said wool prices had also been affected by the lift in the Australian dollar compared the American in the past 10 days. “Difficult to know if it (the strong wool market) us sustainable, but while it’s happening we’re all very excited,” Mr Shawcross said.
He said many growers had bought wool selling forward.
Mr Keys said that included superfine growers encouraged by Landmark’s superfine specialist Ted Wilson.
“They were very well prepared bales and the sale was well supported by buyers – traditionally European mills have been very strong at this sale, and they were today, but the Chinese mills also put a base there and have done so over the past few weeks.
“We’re seeing the difference between 17M and 20M – last three to four years only 100c/kg and now it’s 400-500c/kg,” Mr Keys said.
