Weekly Market Wrap

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With Adrian Field, Melbourne
Trading Manager

September 9, 2005

Market trend continues, industry wants answers

THE eastern market indicator dipped again this week to close at 678 cents per kilogram, a fall of 14c/kg. Passed-in rates equated to 19 per cent.

All wool types received discounts, especially most Merino types.

Southern region

Merino fleece types were again most affected, with 18-25 micron wools shedding 15-25c/kg.

Merino skirtings declined considerably, especially 20-23 micron types and high vegetable matter types. Some types were up to 30c/kg cheaper.

Crossbreds were less affected, falling slightly. Cardings also declined by about 10c/kg.

Obviously all members of the trade are concerned for the downturn in prices, especially for growers with mainly grazing enterprises, and many want answers.

There is talk that various major Chinese merchants, processors and exporters are experiencing problems with payment for deliveries, and hence they have slowed their purchasing of new greasy wool.

We are also probably experiencing the effects of limited competition throughout the world.

The Italians were once the biggest importers of Australian wool. Russia used to dominate in the 1980s. Japan was huge in the 1970s and 1980s, and there has been very good demand over the past 20 years from countries such as Korea, India and the US and UK.
The industry is now positioned with one major player that is able to process wool at very low cost, China.

For prices to improve, there must be demand - we need to get more people buying our products.

There appears to be more woollen products on the shelf and the prices are certainly not getting cheaper. How is it that greasy prices are decreasing and costs to process the wool from greasy state into woven/knitted fabric are decreasing, but retail prices are not adjusting as a result? Profits are being made somewhere!

Meanwhile, next week's sales will again be held in Melbourne, Sydney and Fremantle, with a total offering of about 57,000 bales rostered.

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