Merino fleece sees solid gains of 40-50 cents

Merino fleece sees solid gains of 40-50 cents

Sheep
Overall, the wool market was quoted 20c/kg dearer in local currency, but in US dollars the increase was only 2c/kg higher.

Overall, the wool market was quoted 20c/kg dearer in local currency, but in US dollars the increase was only 2c/kg higher.

Aa

Overall, the wool market was quoted 20c/kg dearer in local currency, but in US dollars the increase was only 2c/kg higher.

Aa

The wool market in Australia opened on Wednesday last week with the enthusiasm everyone had expected and prices rose accordingly, with just about every sale lot finding a new home.

All was considered well again in the world of wool.

That is until midway through the catalogue on Thursday when buyers started to step back a little.

Follow-on business was thin on the ground with customers not prepared to "go again" with another container.

The currency had eased overnight, which protected local prices, but the definite message from overseas customers was one of waiting and reviewing again as caution prevailed.

Prices eased in Sydney and Melbourne as the sale progressed.

Fremantle buyers rolled into a small selection knowing 20 per cent would be passed-in, and a few quick hammers meant they could easily catch the afternoon high tide.

At the end of the week there was a reasonable clearance of wools offered, with only 7pc passed-in, solid gains in price of 40-50 cents a kilogram in the Merino fleece categories, up a few pennies in the crossbred sector and cardings closed unchanged in the east, but the west had to play catch-up and the carding indicator added 50c/kg for the week over there.

Overall, the market was quoted 20c/kg dearer in local currency, but in US dollars the increase was only 2c/kg higher, while the Europeans, still sitting on the sidelines watching with a degree of bemusement, saw an increase of EU8-9c/kg.

Demand for wool in what is now the major volume market - China - has improved slightly, although the worsted (woven) fabric scene is still very sluggish outside of the omnipresent uniform sector.

Knitwear is a different story with reasonable orders being placed by some of the big name retailers.

That would not include Kmart or Target given their minimal range of wool, but other large-scale retailers who are regular players and partners in the industry.

The fake-fur season is considered over for now so the processing trade must look to more normal regular items and lines of production, not that the norm for wool garments is anything like that of 20 years ago.

Gone are the traditional worsted suits and cheap v-neck sweaters that made up the corporate wardrobe for the millennials entering the workforce - to be replaced by chinos (can contain a high percentage of wool) and polos, tees and a multitude of knitted garments in various layers.

The high worth millennials, or friends of Greta, choose a natural product like Merino, while those with less worldly experience buy the polyester/nylon stuff because it has a picture of someone famous on the front.

While those at the pointy end of the wool industry grapple with issues such as converting or educating more of the millennials to stop and think long enough about an issue to make an informed decision, segments all along the chain are looking back at the previous segment and wondering what on earth is going on.

The spinners and knitters are looking at the topmakers and scouring parties and wondering how they can transfer some of their pain from previous high contract prices back to them.

Quality is becoming paramount, and any little transgression is being discussed at length with the supplier, with often a reference to an old contract thrown into the mix.

Topmakers and traders are just looking to survive on a daily basis given the battering they have weathered with the recent downturn in prices.

While the recovery now seems to be in place and spluttering along, they can simply hope everything holds together long enough for them to trade their way back into clear air again.

It is with a large degree of bemusement and at times head-shaking that they watch the raw material sector go about their annual slug-fest to elect directors to AWI as well as promote or stymie new ideas and technologies.

It is fairly unlikely that the other noble fibres such as cashmere or silk, angora or mohair have so many different organisations and boards to oversee the production, packaging, testing, selling and shipment of the underlying raw material.

Back at the front end of the business, where things actually matter because they sell wool there, the retail trade is quietly moving along.

The designers and garment makers certainly have the optimism that things can turn around, and retailers are hoping that consumer confidence will not get way laid in the lead up to Christmas.

It would seem almost a done deal that some form of the trade deal will be signed off in December by the Chinese and American presidents.

The White House economic adviser Larry Kudlow was quoted in the Australian Financial Review saying that the first stage deal was not done yet, but that they were "coming down to the short strokes" - possibly a shearing analogy there but best left alone.

Having got this close to a deal of some sorts it would be political suicide for either leader to back away now.

So those in the financial and equity markets have put the foot down driving the world's leading bourses to record highs - of course the profit takers will come to the fore at some point, but this enthusiasm should spread to the consumers and their spending shortly.

If Singles Day is anything to go by, consumers are prepared to have a crack.

Two companies in China, admittedly very large companies in Alibaba and JD.com racked up sales of US$70 billion in one day last week - all of it on their online platforms.

So, while the bricks and mortar retailing gig is still tough, online activity is doing better than last year when measured by dollar value alone.

The challenge is obviously to make sure Merino clothing is a purchase of choice for the keyboard consumer.

The story Merino fleece sees solid gains of 40-50 cents first appeared on Farm Online.

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