Weekly Market Wrap

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With Brian Vagg, Melbourne

March 14, 2008

Market steadies

THE wool market resumed on Wednesday this week, with most microns trading at higher levels.

On Thursday, these gains - plus a little more - were lost, particularly in the southern region for the broader microns.

The 20-micron and finer types had a relatively good week and closed 15-20c/kg firmer.

Medium and coarser wools eased over the two days, particularly in the southern region on Thursday, when some lower yielding wools were offered. Stronger wools with low mid-breaks were in strong demand.

The Eastern Market Indicator (EMI) was down 6 cents per kilogram for the week to close at 966c/kg.

In a two-day sale in Sydney and Melbourne, the AWEX EMI gained 2c/kg on Wednesday and fell 8c/kg on Thursday.

The average AWEX Micron Price Guides (MPGs) were up by 16c/kg clean for 16.5 microns, by 18c/kg for 17 microns, by 16c/kg for 17.5 microns and by 6c/kg for 18 microns. They were down by 2c/kg for 18.5 microns, by 1c/kg for 19 microns and were unchanged for 19.5 microns. The 20-micron wool average MPG was down by 13c/kg clean, 21 microns by 21c/kg, 22 microns by 15c/kg, 23 microns by 16c/kg, and 24 microns by 13c/kg.

Better skirtings types were generally firm, while others eased. Crossbreds were generally up for the week, with changes in their average MPGs ranging from 0-5c/kg. Oddments came under heavy pressure, with falls across all types on both days.

The average AWEX Merino cardings MPG dipped by 26c/kg.

Buyers for China were dominant, with also good support from those buying for India.

In the southern region, there were 21,249 bales offered, with 13.6 per cent passed in. This offering contained 13.6pc re-offered wool.

The better types were well supported, while bigger discounts are being applied to inferior wools that contain low tensile strength and low yields.

Merino fleece in the southern region from 16.5-17.5 microns gained 10-12c/kg, 18-19.5 micron closed the week 25-30c/kg dearer and 20 micron increased 14c/kg. The broader types closed the week slightly lower, however these types were not assisted by the selection available.

Crossbred fleece closed the week generally firm. Merino skirtings received good support and also closed marginally dearer. Oddments had a bad week, falling by 25-30c/kg.

Next week is the last sale prior to the Easter recess. There are just over 45,600 bales to be offered nationally. The week after the sale recess has 64,229 bales and the following week 49,200 bales to be offered nationally.

Wool industry turmoil

A unanimous decision this week to promote new pain relief technology for mulesing and pacify European retailers boycotting Australian wool has been undermined by continuing bitter factions within the wool industry.

Industry representatives from all major grower groups, including several board members from Australian Wool Innovation (AWI), agreed at a private meeting in Sydney on Monday that a more proactive approach was needed to prove to European retailers that Australia had made considerable improvements to its animal welfare standards as it worked to phase out mulesing by 2010.

Bayer pain relief researcher, Dr Meredith Shiel, who attended the meeting, agreed to fly to Sweden on Tuesday to meet with retailers and explain the benefits of pain relief to help douse the boycott crisis spreading through Europe fashion houses refusing to use Australian wool from mulesed sheep.

AWI chairman Ian McLachlan said he met with Dr Shiel before the trip and said while mulesing alternatives were being developed, pain relief was available.

Yet just a day after the Sydney meeting of industry bodies, Wool Producers Australia chairman, Don Hamblin, issued a bitter press release inadvertently denouncing the trip, triggering outrage from others at the meeting. Source: Rural Press

Chinese shoppers spend up on wool

With China's continuing positive economic conditions and GDP growth in 2007 higher than forecasters expected, China's consumers also lifted their spending.

In textiles, the volume of apparel retail sales rose very strongly in the 11 months to November 2007, while interior textiles retail sales were similarly buoyant over the same period. Given this, demand for wool apparel and textiles in China would be expected to rise quickly.

However, the latest estimates of wool consumption at retail in China (as measured by Woolmark's Net Domestic Availability estimate) show a very mixed picture.

Total wool consumption at retail in China lifted moderately in 2007, but all of this rise was due to higher consumption of wool in interior textiles.

In fact, wool use in interior textiles in China's domestic market was the highest on record in 2007. In contrast, demand for wool in clothing in China stagnated in 2007.

Despite the weak result in the domestic market for apparel wool, China's processing of apparel wool lifted in 2007 on the back of strong export demand for finished wool garments. Source: The Woolmark Company

Merino active wear takes off with new winter range

Australian Merino wool just got a whole lot warmer - and a whole lot cooler too.

The luxurious Red Island active and leisure wear Winter 08 range, created exclusively by Charles Parsons, will be available nationally this month.

A total of 14 Red Island styles will be delivered to Purely Merino stores in international airports around Australia.

Designed for comfort, the multi-climatic Red Island collection is made from super soft, ultra-light Merino and is designed for the active man and woman. Source: www.redislandmerino.com.au

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