Giving the first glimmer of demand slowly returning, prices of most types and descriptions posted modest gains at Australian wool auctions this week. While the first day selling was hit hard initially, indications of strengthening interest and competition became apparent late on that day. The positive sentiment transferred fully into the final day.

The Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) lost 10ac or 0.7 per cent to close at 1365ac clean/kg. In US Dollar (USD) terms the USD EMI reversed the downturn of the past 4 weeks to see that indicator gain in value by 6usc or +0.7 per cent to 931usc clean/kg. “Given that much of the trade settlements are contracted using USD, this is perhaps the first glimmer of demand slowly returning, albeit in some of the smallest offered quantities seen in Spring for quite some years,” Australian Wool Innovation (AWI) said in its ‘Wool Market’ report for the sale week 10 of the current season.

The auction environment is being dominated at present by sellers exercising their right to withdraw wool prior to sale or passing their wool sale lots in if they fail to meet the price expectation of the grower sellers. As prices fell initially this week more wool was withdrawn, but with many growers having to sell to meet the rising and constant financial commitments and costs associated with flock management in the tough drought conditions that unfortunately continue unabated, the AWI report said.

“The pre-sale sentiment and talk was firmly based around the tough trading conditions whereby just small volumes of trade was available and at very low cautious bids. Many exporters are facing the worst trading conditions in their history, whilst first stage manufacturers are hurting just as bad if not worse, hence the rapid decline of market values. Cash flow through the entire wool pipeline is poor at present with delays of delivery at many levels hampering the normal operations to budget.

“Whilst the final days selling this week saw rising prices on all wool types, a general 15 to 20ac loss was the result on most Merino fleece and skirting types. On the other hand, though the long-suffering carding types saw small gains from the outset and closed the week 20ac higher to the sellers’ favour. Crossbreds sold solid throughout and small gains occurred across the selection on offer,” the report added.

Around 28,000 bales is rostered to sell in Australia next week with the very unusual 1 day sale occurring in Sydney in the middle of the main shearing time. “With NSW normally producing around a third of the Australian wool clip, this is indicative of the big concerns many have in the industry for the stressed supply situation for the rest of the season.”