Local wool market enjoys solid recovery

A two-sale price slump at the Western Wool Centre (WWC), and Melbourne and Sydney centres also, prior to Thursday appears to have been a steadying correction for a market considered by some to be in danger of turning the tender festive season lamb into overdone mutton.

It helped ease concerns about post-Christmas wool supply, with more passed-in lines being returned to wool stores to be re-offered after the WWC's three-week Christmas-New Year recess.

Exceptional prices and a great season in WA, compared to a wet one over East, have run stocks in local wool stores right down, prompting broker concern about sourcing sufficient Merino wool to meet market demand until the start of autumn shearing.

Australian Wool Exchange (AWEX) national figures tell the story.

At almost the season halfway mark, year-on-year 2016-17 has seen a 6.97 per cent increase - that is 53,642 bales - to take the national total of bales offered for sale to 823,378.

So far, 93.2pc or 767,820 bales have sold.

Having climbed 98c in six sale days since the last correction, the Western Indicator (WI) topped out at 1450 cents a kilogram clean on Wednesday, November 30 - a five-year high.

It eased the following day, but when prices started to slide again from the first sales on Wednesday last week, suggestions Scrooge had snatched back credit cards were quick to surface.

Brokers muttered about buyers - who have spent up on big sale offerings this season - having hit credit limits and the story seemed to have several sources, giving a perception of authenticity.

Also, national weekly wool sales turnover topped $72 million according to AWEX for a second week in a row, after four weeks with turnover ranging from $64.7 to $68.7m, adding further financial plausibility.

But Thursday's trading put paid to speculation about credit limits restricting buyers' ability to bid freely.

Having slid 43c to 1401c by the close of trade on the Wednesday, the WI reclaimed 10c and finished Thursday at 1411c.

In his market comment AWEX WWC technical controller Andrew Rickwood said the fleece market had "steadied and strengthened".

"The tone of the room was more positive from the first lot and the competition was widespread, pushing the market 5-20c dearer when compared to the previous sale, with the finer edge enjoying the largest gains," Mr Rickwood said.

The skirtings and oddments markets also bounced back strongly with better specification wools leading the way.

Despite the market correction on the Wednesday, national sales turnover for last week topped $72m for a third week, coming in $880,000 shy of the previous week's $74.17m highpoint since AWEX introduced the statistic in its September 15 weekly report.

Last week's sales took the wool turnover tally so far this season to $1215.46m.

Chinatex and PJ Morris Wools buyers continued their auction room battle for biggest buyer title with Morris taking last week, buying 1507 bales compared to 1021, but Chinatex is leading for the season with 15pc against 13.4pc of all wool sold at the WWC.

Primaries of WA wool manager Greg Tilbrook was happy to see a short-lived correction.

"It was a good lift (on Thursday), the market returned," Mr Tilbrook said.

"There's now a little bit of carryover for January which is good because there is not a lot of wool about.

"I've got a few clients who are shearing now they've finished harvest, but it's not a lot of wool.

"Some are shearing their young ewes, their surplus hogget ewes, before they sell them - if they're going over East they have to be bare shorn anyway - so they get 1000, 1100, up to 1200 cents a kilogram for the wool on top of what they make from selling the sheep.

"It's very good money," he said.

The recovery last Thursday was despite the largest national weekly offering so far this season of 53,248 bales, just beating the week three total back in July.

Early indications are the national offering could be of a similar size again this week, the last two sale days before Christmas.

According to AWEX, prices at the end of last week put the indicative value of a 185kg bale of 19 micron wool at $1910, a 5kg 19 micron wool cut at $52 a sheep and a 6kg cut at $62.