After a brief flurry of confidence brought about by the G20 Agreement to halt the trade war and further tariff increases doubts began to creep in concerning the actual agreement that had been reached and whether this would bring about lasting compromise. This meant that Chinese confidence wavered slightly and the wool market subsequently spluttered around, but eventually closed on a strong note.
The EMI closed down 11 cents in local terms, and lost 25 US cents, and 17 Euro cents. However, of the 24,000 bales of adult fleece wool offered for the week, 6000 bales or 25pc was crossbred wool.
As predicted follow-on demand for crossbred wools failed to materialise after the brief flurry of activity in the previous two weeks and so these wools contracted sharply in price dragging the overall market indicator down. Merino fleece was generally 10 to 30 cents dearer, while crossbred wool fell by $1, despite around 20pc of these wools being passed in.
The final sale for the calendar year sees a similar biased offering with a multitude of crossbred wool again being rostered, so more than likely the trend will continue with merino types getting stronger, but crossbred wools probably drifting rather than falling quite so heavily.
From a demand perspective merino fleece of good quality continues to find support as mills continue to operate and fulfill existing orders and new business that continues to steadily emerge. What the market continues to struggle with is the continued supply of drought affected, hunger fine tender fleece and obviously the plethora of crossbred wool which is normal for this time of year.
Thanks to the current seasonal conditions the average monthly fibre diameter of merino wool sold in Australia is currently running at 18.5-micron. A far cry from the days when Australian sale centres featured row upon row of 24-micron strong merino.
The seasonal conditions, which have led to such a dramatic decrease in both production and wool quality have provided a challenge, as has the inevitable price resistance brought about by the dramatic increase earlier in the year. Although the price of merino has been on a steady upwards trajectory for the past four years, the market has only become unsustainable, and therefore forced into a correction in the past 12 months.
The immense spike in price which began in January created a volatile situation and as a large proportion of the demand was for short term fashion items, such that the market in general had to react. Since June the merino market has been more or less retracing much of the early 2018 gains and now appears more settled in line with the four-year trend.
