Brokers hoping wool market remains up

Brokers hoping wool market remains up

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Trading at the Western Wool Centre (WWC) last Thursday may have put the brakes on a price slide as buyers look at the logistics of shipping wool around the Chinese new year.

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TRADING at the Western Wool Centre (WWC) last Thursday may have put the brakes on a price slide as buyers look at the logistics of shipping wool around the Chinese new year.

January 25 marks the start of 10 days to two weeks of new year celebrations in China when commerce and industry - including the ports and woollen mills - shut down so employees can travel to the provinces to join their families for the celebrations.

Effectively, after this week, there will only be three weeks of trading before live wool auctions shut down for three weeks for our own Christmas and new year celebrations and then the first week back in the new year at the WWC where it might still be feasible to buy wool, ship it to China, unload it and deliver it before the chaos of the Chinese new year.

"The Chinese new year is certainly something that suppliers to the Chinese mills will have to factor into their calculations at some stage very soon if they want to maintain continuity of supply," said Westcoast Wool & Livestock auctioneer Danny Ryan on Tuesday.

"I'd like to think that was one of the reasons the market here finished firmer last week."

After the Melbourne and Sydney wool auction centres had finished trading last Thursday, with micron price guides there easing across the board in similar fashion to the previous day's trading, the WWC bucked the trend.

WWC price guides had experienced sharper falls of between 22 and 44 cents per kilogram clean on Wednesday but recovered between 1c/kg and 6c/kg on Thursday.

A fleece wool passed-in rate of 26 per cent on Wednesday blew out to 33pc on Thursday.

This was seen as one of the reasons prices steadied and recovered slightly when buyers realised sellers were not going to accept further price discounting and time left to get wool shipments to China was getting tighter.

The Western Indicator finished down 22c for the week at 1655c/kg and the micron guides down between 18c and 40c for the week, with 19 micron wools suffering the biggest fall to 1787c/kg.

But despite Melbourne and Sydney wool prices sliding both days last week while WWC prices steadied and came back a bit on Thursday, overall WWC prices still lag behind Eastern States' prices - by just a few a few cents at the broader end of the micron spectrum, but by as much as 36c at the finer end.

This makes Western Australian wools appear a relative bargain to higher-priced tender drought wools on offer over east.

It has WWC brokers hoping last Thursday's trend will carry over into this week and break the recent yoyo cycle of the market being down one day and up the next.

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