Knitwear is the eighth wonder of the world when it comes to driving wool demand

Knitwear takes centre stage

Wool
Brokers are noting a particular global trend in demand for wool destined for the knitwear segment of the market.

Brokers are noting a particular global trend in demand for wool destined for the knitwear segment of the market.

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Global buyers are chasing wool for the knitwear segment of the market.

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The first week of wool sales performed admirably to start the new calendar year and, as far as we are concerned, the eighth wonder of the world is wool knitwear.

The pressure on micron continued at last week's auctions, as it has over previous months.

But, as we have discussed numerous times in the past few years, knitwear demand has been supportive of the pricing structure of the market.

This segment has gained the status of being the structure of the wool market - with everything seeming to revolve around knitwear, including the pull-through of volumes in the supply chain.

Fox & Lillie's export dialogue with various clients that we ship to in China confirms that most of the wool being purchased is destined for knitwear - in the many forms it can take.

This is supported by the minimal discounts at auction for lower staple strength lots, or even for over-long types that used to get well discounted.

Some long wools - of up to 125 millimetres in staple length - in the 18-micron and broader categories are selling for only 4-8 per cent less than sound typical length types.

Even the over-long types, with a staple strength of about 20 Newtons/kilotex are selling in this range.

The European market is much slower than usual, but it is showing equal interest to China for knitwear products.

Similar microns and types are being sold to Europe to end up as knitwear, rather than being woven into cloth for suiting - as these would have been traditionally.

Even in Europe, knitwear is a positive story - but many markets there have a lot of machinery set up for cloth production.

The earlier reference to over-length fleeces is certainly an end result of such a superb growing season in so many parts of eastern Australia.

But another factor making wool even longer is the limited availability of shearers.

Some districts are at least two to five weeks behind schedule for shearing.

The impact of COVID-19, leading to a lack of New Zealand shearers here in the past nine months and border closures between Australian states last year are just more examples of the far-reaching consequences of the virus pandemic.

Some other positive signals for wool are coming from Fox & Lillie Rural's forward markets, with much better levels being bid on out to the end of this year.

These levels are improved from even a couple of weeks ago, which reflects the stronger market.

From a risk management perspective, clients who want to protect themselves from downside for upcoming shearing certainly have much better opportunities at present.

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