The EMI lost half a per cent at auction sales in Australia this week. Now resting on 1076, the EMI was down 5c in AUD and up 3c in USD. With 42,000 bales on offer the buyers were very selective in their purchases; there were some positive signs in the best style fine and superfine micron categories; however the average and poor style fleece selection remained under pressure from a firming Australian dollar which briefly broke the 90 USc barrier on Thursday.
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Merino Skirtings mirrored the fleece trends whilst the Crossbreds (once again) outperformed the Merino sector and cardings maintained last week’s values. So this two speed Merino market is really starting to raise concern amongst players. It seems we sit delicately balanced between some resistance from China for our Merino combing wools hindering demand and the on the supply side we are continually producing less wool globally.
Another worry is the recent loss of the speculative traders from our exporter list. There ability to take a stock position in the price valleys and capitalise when demand and price improved is dearly missed. The other positive is the slow but steady re-development of a liquid forward market. The recently developed I-CAP wool desk has attracted a lot of interest from non wool related businesses.
Ultimately which ever way we look at it, our fibre relies on activity at retail. Whilst Asia remains our short term focus the slow recovery of Europe and US economies is the real future for the merino industry, and the best news is that we can now see a heart beat in these regions. That may explain the ABARE outlook for wool which was released this week is an increase by around five per cent in 2014–15 to average 1160c/kg.
