Merino wool prices dipped at Australian auctions this week, as extremely low supply volumes were insufficient to uphold current price levels. Additionally, a stronger Australian dollar (Au$)—which increased by 0.7 percent against the US dollar and 0.5 percent against the Chinese yuan—put further strain on the local market.
Despite this, the wool market demonstrated slight gains of 0.4 to 0.5 percent in foreign currencies, indicating that demand is trying to keep pace with the limited supply, according to commentary from Australian Wool Innovation (AWI) for week 50 of the ongoing wool marketing season.
Exporters faced increasing challenges in achieving profitable sales. Although Chinese buying continued, it lacked its usual breadth. However, demand from China’s top-makers rose, with the two largest buyers representing over 30 percent of Merino fleece sales. Interest from India diminished over the past two weeks, and European purchases remained minimal, mainly focused on high-quality wool segments.
With fragile global trade sentiment, buyers were hesitant to accumulate inventory, resulting in decreased competition for lower-quality wool types. Nevertheless, robust activity from top-makers in China helped to support prices for these lots.
Conversely, crossbred and carding wool types bucked the downward trend, experiencing price increases of 10 to 20 Australian cents across most categories, despite unfavorable currency fluctuations, as noted in the AWI commentary.
Growers showed a strong willingness to sell, with only 8.3 percent of lots passed in and clearance rates exceeding 90 percent.
Next week’s offering is anticipated to be around 22,000 bales. Fremantle will not conduct a sale, instead opting to build supply for Week 52. Auctions in Sydney and Melbourne are set for Tuesday and Wednesday, though with smaller catalogue sizes.
