It's been a wild ride for wool in October

Bulls run in October

Sheep
The wool market's roller coaster ride so far in October is predicted to continue as China dominates demand on the back of national holiday buying by consumers.

The wool market's roller coaster ride so far in October is predicted to continue as China dominates demand on the back of national holiday buying by consumers.

Aa

Chinese buyers are leading the charge for limited supplies of wool this month.

Aa

The wool market saw a tremendous run-up to last week and the pressure increased as each hour drew closer to start of the national wool auctions.

Looking back at the period leading up the sale tells quite a story.

On Thursday October 8 - after the previous sale week - the price levels from China were sitting below the close of the market.

This led many traders to believe that the following week's market wouldn't see much upside, and possibly there would be a slight easing.

The following day, on Friday afternoon, Chinese users had raised their levels to about the market close and traders felt this was a more confident sign that the wool market would be, at least, solid.

During that weekend, Chinese users had increased prices being pitched at the traders here in Australia.

But they were becoming more cautious, sensing the risk of selling too much and being caught in a squeeze.

By the evening of Monday October 12, there were even higher levels on offer from China - for those game to take the challenge - as Chinese users tried to get more quantity locked-in.

Then on the Tuesday morning before the wool sale, there was a buzz around that we hadn't seen in a long time and buyers were preparing to bid up to get some inventory.

That day, the market ran well up to realise gains of up to 60 cents a kilogram on most Merino types - and superfines even more so.

In the late afternoon and evening, traders saw more frantic activity from China, which again threw levels well over the closing quotes and more business was concluded at premiums to market levels.

Wednesday October 14 marked another strong rally and, after the eastern sales closed and Fremantle opened, the market eclipsed the levels in the east - often a good indicator of a bullish market.

So, what are some of the factors driving this rising market across the month of October to date?

Two weeks ago was Golden Holiday week in China, which is a week-long holiday to celebrate the country's National Day.

This year, more than 600 million Chinese tourists traveled domestically during the week and injected 466.6 billion Chinese yuan (about $96.4 billion) into the economy, according to the Chinese Ministry of Culture and Tourism.

Golden Holiday week leads up to another significant Chinese public holiday - Global Shopping Festival - which is held on November 11. This was previously well-known as Singles' Day - due to 11/11 resembling 'single sticks', which is a Chinese term used to refer to bachelors.

Global Shopping Festival is now the biggest online shopping day in the world, where the retail industry expects big movements of product.

This has fabric and garment manufacturers wanting to replenish stocks in anticipation of a big sell-down.

Demand in China continues to be for knitwear.

But there have been some indications that double face fabrics are becoming popular again - which is supportive of Merino carding types - and even some talk of more interest in fake fur, which could help crossbred wool types - particularly finer than 29-micron.

Given the momentum and interest from China - with our other main markets of India and Italy still very subdued - we are expecting a very positive market this week.

Aa

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