Weekly Market Wrap

Adrian Field
Mark Dyson
Managing Director
 

With Adrian Field, Melbourne
Assistant Trading Manager

August 22, 2003

Market dips as demand slows

THE eastern wool market fell 14 cents per kilogram this week to close at 912c/kg.

Prices at Melbourne were affected the most, with a fall of 25c/kg.

Merino and crossbred fleece types were in the firing line, while remaining pieces/bellies and oddments were virtually unchanged.

Newcastle was only slightly cheaper compared to last week’s Sydney sale, although it is difficult to compare to the Melbourne fall as the wools are generally more superior in Newcastle.

Passed-in rates climbed considerably (about 20 per cent). It appears price reserves are often being set at previous weeks’ market levels and are strict.

It must be remembered that the nature of the wool market, or any market for that matter, is continual change. Wool passed in by just a few cents could attract bigger losses if the market drifts considerably the following two weeks (about the turnaround time to re-offer passed in lots).

It is always a good idea for growers to speak with selling representatives who are informed about trade activity and are able to give an insight of where the market may be heading short and/or long term.

With trading activity able to change so rapidly in such a short time, it’s important for growers to get updated information in the days leading up to offering their wool.

Meanwhile, we are always referring to China buying activity (or lack of it) when discussing the market, and this week is no exception.

China is still very quiet and this fact alone is enough to explain why the market tone is poor.

Scattered business throughout Europe and from local processors has supported the market the past few weeks.

Much of Europe is on holidays and China is extremely quiet, and therefore a slump is no great surprise.

With volumes of wool on offer predicted to rise slightly in coming weeks, prices may continue to fall. The big influential factor is again China.

Wool broader than 19.5 micron is currently attracting very good money, particularly 22-27 micron types. Although prices for these wools have not reached the levels of last October, they are much better than the average of the past 10 years.

We don’t expect much change in the market next week, but, as we are aware, a lot can change in a matter of days.

If anything, the market could be fairly subdued, with prices possibly falling slightly.

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