Weekly Market Wrap

Adrian Field Trading Manager

With Adrian Field, Melbourne
Assistant Trading Manager

May 9, 2003

China concerns softens market

THE wool market eased slightly again this week to close at 950 cents per kilogram for the southern region.

The clear message is that the fall is largely due to the lack of activity from the largest importer of Australian wool, China.

Prior to Easter, China's demand for Australian wool started to slow as a result of the poor local/domestic and international demand for woollen items.

The Chinese economy is now facing uncertainty due to the SARS epidemic, where no outcome has been predicted at this stage.

Until there are some positive developments in the region, demand will most likely continue to soften, especially when considering that China has accounted for about 40 per cent of Australian greasy wool exports over the past financial year.

However, some European buyers may find the lower prices to be more attractive and sustainable, provided the Australian dollar does not continue to rise.

Price levels for basic Merino fleece types have tightened even further, with only about 200c/kg difference between 18 and 23 micron fleece wool. The 20 micron and broader wools are still achieving much higher prices than those recorded over the past decade.

Depending on individual circumstances, it may be effective to sell 20-26 micron wools as a result of the attractive prices.

Next week's wool sales offering totals 61,000 bales Australia-wide.

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