Australian Wool Market Prices Fell Slightly Last Week

In last week's Australian wool auctions, we witnessed a dip in prices, particularly affecting Merino wools. On the flip side, crossbred wool types managed to eke out slight gains, constituting more than 22% of the total bales up for sale.  

The market's rhythm faced a hurdle with the Australian dollar flexing its strength, surpassing 0.66, exceeding last week's rates. This follows a week of favorable foreign exchange movements for sellers, as highlighted by the Australian Wool Innovation (AWI) in its week 30 commentary.  

China, the primary wool importer, is showing a subdued appetite, especially in the weaving sector. Despite this, a chilly spell in China during December 2023 sparked a notable uptick in retail sweater (knitwear) sales, surpassing the usual figures.  

Finest Merino wools bore the brunt of significant price reductions, and growers seem to be adopting a cautious stance with rising passed-in rates, holding back on sales.  

In the Merino domain, we witnessed a significant downturn in prices for wools ranging from 18.5 to 19.5 microns, with a drop of approximately 25ac. The finest Merino wools, measuring less than 17 microns, faced an even steeper decline of 60ac. This shift can be attributed to sporadic European activity and market adjustments in response to the availability of these premium types.

On the flip side, wools broader than 20 microns, though representing a diminishing portion of the Australian Merino clip, remained relatively stable, experiencing only a modest reduction of 5/10ac. Fine and medium wools, spanning from 20.6 to 23.5 microns, constitute a mere 12% of the tested wools for the first half of the 2023-24 season, according to AWI commentary.  

Passed-in rates at auctions approached 10%, signaling a growing trend among growers to retain a portion of their clip as prices decline. This is notably observed in the case of Merino fleece in Melbourne (11.6% passed in) and Fremantle (21% passed in). Interestingly, two of China's largest top makers played a prominent role among buyers, receiving significant support from trader exporters.  

Looking ahead, this week will feature a shorter auction schedule, spanning just two days—Tuesday and Wednesday—with approximately 36,000 bales slated to be offered. 

Conclusion

In summary, last week's Australian wool auctions showcased a mixed market, with Merino wools experiencing a dip while crossbred types saw slight gains. Despite subdued demand from China, a boost in retail sweater sales, triggered by a cold spell, added a positive note. Finest Merino wools faced significant price reductions, leading to a cautious approach by growers, evident in rising passed-in rates. Looking ahead, the upcoming week's auction schedule is shorter, spanning two days with approximately 36,000 bales on offer. The industry adapts to evolving conditions, and we anticipate further insights into the resilience of the Australian wool market.