China undeterred by soaring spring prices

Wool prices and export volumes surge


Sheep
Wool classer Jay Collins, Temora, skirting fleece with shearing the first cross ewes underway for Glen and Chris Hartwig, Cambrai Farming, "Oakbank", Trundley Hall via Temora. Photo: Rachael Webb

Wool classer Jay Collins, Temora, skirting fleece with shearing the first cross ewes underway for Glen and Chris Hartwig, Cambrai Farming, "Oakbank", Trundley Hall via Temora. Photo: Rachael Webb

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Wool supply struggles to satisfy the appetite of Chinese mills.

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AUSTRALIA Wool Exchange (AWEX) Eastern Market Indicator (EMI) has soared to 1550 cents a kilogram, as the spring supply struggles to satisfy the appetite of Chinese mills.

Despite being a national holiday week in China, Chinese wool interest in the Merino sector has ramped-up, resulting in a surprising 28c spike in the EMI.

The EMI climb was nearly 2pc week-on-week higher in Australian currency and 25c in US currency at sales in Sydney, Melbourne and Fremantle, where 38,217 bales were on offer nationally.

AWEX reports the value of the wool sold was $67.9 million, or $1,842 per bale, taking the season total to $776 million in week 13 of the season.

“There are continued reports coming back from China that stock levels are very tight,” Fox and Lillie woolbrokerage manager Eamon Timms said.

“We’re seeing a lot more indent orders, as well as exporters having to complete orders they have recently sold, the result is a significant appreciation in values.”

He said there was a swing to the positive in the market this week with 17 to 20 microns all up healthy amounts.

Other types which had a significant jump was 16.5m and finer tender types and 21.0 micron burry fleece – which had been selling at large discounts over the previous three weeks.

The average merino cardings price guide climbed a further 16c to continue its escalating rise over the last five weeks and the major driver for much of the rise is the double face fabric made from these types.

The only market disappointment is the crossbreds which fell apart from the 26 micron and finer types.

Mr Timms said there were signs of market confidence at these levels, which were not showing in the past month.

“It has been interesting to see such a rise in the market even while exporters are extremely tight for cashflow,” he said.

“The previous week some exporters were even holding off on finishing orders to conserve dollars while they waited for letter of credit payments to flow through from China on containers waiting for shipment.

“The factor that is driving this market the most is demand, with many users in China again leaving themselves in a hand to mouth position by not having any stock buffer.

“The short term outlook seems  to support the current prices.”

Australian wool exports reflected this increase in demand with the volume of wool exported up 11pc from July to August, compared with the same period in 2016.

According to the Australian Bureau of Statistics the value of exports has spiked 21pc year-on-year, with almost all of the major export destinations recorded strong lifts, with the exception of South Korea with exports declining.

The largest increases in the volume of exports were seen for the Czech Republic, Malaysia, Bulgaria, Thailand and China.

The story China undeterred by soaring spring prices first appeared on Farm Online.

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