After a momentary, and short-lived market rise during week 48, the Australian wool market has continued its downward trend over the past few weeks.
Continued tensions caused by the China/US trade war have escalated market falls, with the Eastern Market Indicator (EMI) now shedding 7 per cent of its value since sales recommenced after the Easter break.
The market has now fallen for five of the last seven weeks, with the market rise of week 48 now long forgotten.
In the two weeks since week 48, the market has fallen almost 3.5pc, with the outlook for further falls over the coming weeks looking extremely likely.
Overall, medium micron Merinos continue to perform better than the market, with most microns between 19.5 and 22.5 only falling 5-6pc during this period.
This is mainly due to the extremely limited supply of wools in these micron brackets, mainly caused by the drought over the past 12 months.
Superfine wool has taken a more significant fall during this period, with some types 8-9pc lower.
Due to the drought, the increased supply of superfine wool is continuing to impact growers returns - up to the end of May 2019, Australian Wool Testing Authority test volumes for 18-micron and finer still showed significant increases in volume compared to the 2017/18 wool growing season.
For Merino fleece types, the increase in superfine wool volumes, and the significant fall in medium wool volumes has created an extremely flat market - there is now less than 4pc difference between 17.5-micron wool and 21.0-micron wool.
Whilst supply remains the same, there is room for this to tighten further as clients struggle to find orders for the increased volume of superfine wools.
Crossbred fleece has also taken a significant fall over the last seven weeks, with 28.0-micron wool falling almost 17pc over this period.
Some of this can be attributed to the time of year - crossbred volumes are low at this time of year, so there are generally fewer orders in the market.
Most of this fall can be attributed to the slow down on fake fur orders from China - this market has been a big driver of the strong crossbred prices seen during this season.
Fake fur has been the shining light in China this season - it was one of the key drivers causing the market to rise earlier this season.
The significant fall in crossbred values highlights the impact the China/US trade war is having, with most clients reporting fake fur demand is now finished for the season.
With only four sales left until the July off-season break, there is hope that the market will stabilise a little over the coming weeks, as clients buy wool to keep their mills running over the off-season.
Ultimately, the market is pointing to further falls over the coming months, so any sign of a stable market will have a positive effect on wool demand.
- Evan Croake is the export trade manager for Techwool Trading.