The Australian wool market continued its downward trend last week with the EMI falling an additional 16c/kg to close at 904c/kg last week.
There was a national offering of 55,718 bales of which 21.7 per cent were passed in.
The bulk of last week’s lacklustre competition revolved mainly around Australian exporters working against Chinese greasy orders with global topmakers picking up around the edges.
The negative sentiment currently being expressed in the marketplace continues to gather momentum.
It comes in the form of depressing yarn prices, record lows in consumer confidence, effluent crackdowns in China and close to empty order books into the later half of this year.
These factors considered, a fall in the EMI of 16c/kg should be considered as minor particularly with the AUD hitting highs of 0.9470 mid week.
The argument that limited supply and grower resistance to a falling market will keep the prices buoyant may be a valid one and it is possible that we could see prices rally periodically on the back of this fact.
However demand must start to turn around before we are to see any positive long-term trends and at this stage there is nothing to suggest that this is happening.
On this basis we expect to see the occasional firming of prices as they continue their journey downwards.
High passed-in rates may only further the woes of this market in the coming months.
Unless growers can afford to hold these wools for more than 12 months we would expect to see much of the recently passed-in lots being added to the upcoming rostered selling quantities which will only work to ease the market pressure and reduce prices.
17.0-19.5
Apart from some spirited competition on the 19.5u wools the overall mood of this category was down. As expected better tested wools with high NKT and yield were well supported which created some big price gaps on certain microns.
19.6-24.5
Chinese and Indian greasy orders were responsible for most of the buying here.
Exporters were buying the bare minimum to fulfil their commitments. Additional business in the midst of this downward trend is proving difficult to find.
25.5 and coarser
Decent demand for New Zealand carpet wools may be having a positive effect on Australian crossbreds and could be dragging our levels up slightly but the overall demand for hand knitting yarn remains bleak.