Australian Wool Auctions Witness Dip in Prices, But Demand Improves

In the latest selling week, Australian wool auctions experienced a decline in prices; however, there were some positive developments as buyer competition and demand improved, particularly for lower vegetable matter (vm) sale lots and higher specification ones. The Australian Wool Innovation Limited (AWI) noted encouraging market activity, especially for the 18.5 to 20.5 micron range Merino fleece types, which constituted the majority of offerings during sale week 46 of the ongoing Australian wool marketing season.

The AWI Commentary highlighted the significant role played by the favorable foreign exchange rate, particularly against the US dollar, in boosting Australian dollar returns to growers. As a result, there was a notable 12 percent improvement in the clearance rate, with sellers more inclined to accept bids at current levels.

With the wool marketing season approaching its end and quantities on offer starting to diminish, buyer attention is increasingly focused on upcoming rostered quantities. Buyers are strategizing to fulfill outstanding contracts and prepare for a period of reduced wool availability, as stated by AWI.

The AWI commentary further emphasized the dominant role of leading trading exporters in sale rooms, who exhibited restraint to avoid disrupting the current trend. This approach instilled confidence among other market participants and bolstered faith in the ability of the wools on offer to move up the supply chain.

There is a sense of cautious optimism prevailing in the market. More users are now willing to place orders, albeit cautiously, in order not to unsettle the market. This “quiet confidence” was also evident at the recently concluded International Wool Textile Organization Congress held in Japan.

Although day-to-day traders played a secondary role at the conference, face-to-face interactions, which had been lacking due to travel restrictions in recent years, resulted in modest but significant new business opportunities. Representatives from all international export destinations for Australian wool were present, expressing optimism for the long term, despite the focus on China’s recovery post-lockdown.

For the current week, 46,000 bales are on offer, with auctions scheduled for Tuesday and Wednesday, presenting further opportunities for market participants to engage in wool trading.


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