WOOL supplies have slowed to a trickle and buyers are scrambling to fill international orders in WA before the annual July market recess.
It has been an exceptional season, with quality wool on offer and more of it – an increase of 80,520 bales or 4.68 per cent on last season Australia wide at this stage – and sold for record prices, but in WA it has reached an end.
Seasonal conditions are not conducive to it being repeated in season 2017-18 according to wool buyers and brokers.
The lack of wool on offer is compounding a problem that has potential to cost buyers plenty, particularly those working on their own or for export companies specialising in specific styles or types for clients.
There are no auctions at the Western Wool Centre (WWC) this week with auctions on Wednesday and Thursday of next week finishing the 2016-17 season.
This will be followed by four auction days in the first two weeks of the 2017-18 season before a three-week break.
Buyers are working on purchasing enough suitable wool over the remaining six auction days to complete orders, and importantly, fill shipping containers and get them on the water before the break.
As one worried buyer explained, buyers usually pay brokers for wool within 14 days and carry that cost until they get paid by clients when the wool is accepted at its processing destination.
If a buyer gets caught with a half-full shipping container at the start of the recess he may have to carry the cost of what he paid for the wool in the container for those three weeks, plus however many weeks after the recess it takes to fill the container and ship it out.
“It could cost a lot of money to carry finance for that long,” the buyer said.
Peter Scanlan Wools’ buyer Steve Noa was one buyer frustrated by the lack of wool on offer after last Thursday’s auction of 1983 bales – a month before the offering had been 3723 bales on a Thursday.
“There’s very little about, no one has got any wool,” Mr Noa said.
But there is a bright side for him.
Mr Noa is taking advantage of the quiet time and the recess to lead Scanlan Wool’s annual grower tour to China for 16 days during July.
The lack of wool on offer and the scramble to fill orders was reflected in last week’s trade at the WWC.
On Wednesday, returning after a week’s break, the WWC market for 20 micron and coarser wools surged between 45 and 65 cents per kilogram greasy because there was very little else on offer.
“A very limited number of 19.5 micron and finer (wools) were irregular and tending buyers’ favour,” Australian Wool Exchange (AWEX) technical controller at the WWC, Andrew Rickwood, said in his trading report.
The price surge continued on Thursday with 19.5 micron, and to a lesser extent 19 micron wools that were offered, joining in as week 50 of the season was ticked off.
Gains for the week by 20 and 21 micron wools were 113c/kg and 101c/kg, taking them to record prices since 2000, while the Western Indicator finished up 63c at 1567c/kg.
According to AWEX, wool auction turnover at the three selling centres last week was $43.81 million bringing the total so far this season to $2.6 billion.
There may be some relief for buyers next week with more choice and the WWC offering predicted to increase more than 1100 bales to 5813, then to jump to 8100 for week one of the new season when the offering traditionally increases, and then dropping back to 5800 bales the week before the recess.
A predicted early start to spring shearing may see new wool starting to flow back into wool stores by the end of the auction recess in the second week of August.