FOR the fourth week in a row, the Western Wool Centre (WWC) wool market continued to power on last week, with exporters and processors now working around logistics problems with an extended eight-week cycle.
According to wool buyers at the WWC last week, the wool processing industry in China and wool exporters in Western Australia have adopted an eight-week cycle between orders being placed and wool being delivered.
Effectively doubling the pre-COVID cycle, the new work-around is to overcome significant shipping delays which look like remaining in play for exporters and importers for some time and the COVID city-wide lockdowns which are disrupting, but not strangling completely, internal transport networks in China.
"Basically, the wool being bought today is for (delivery and processing) in July," said Techwool Trading's WWC buyer Russell Fraser on Wednesday last week.
"The industry has settled into an eight-week cycle now," Mr Fraser said.
READ MORE:
Techwool Trading is Australia's largest wool exporter and continues to top the WWC buyers' list with 54,495 bales, or 20.8 per cent of wool sold at the WWC so far this season, according to Australian Wool Exchange (AWEX) statistics.
Despite Shanghai being locked down and its port - the busiest container port in the world - operating on very limited capacity, WA wool was still getting through to processors who wanted more, buyers pointed out.
Tianyu Wool's buyer at the WWC Zena Wareham - who took over from industry veteran Dave Cox at the start of the year - and Alan Brown who buys for Meliwa, both confirmed shipping remained difficult, but the wool was getting through and they continued to have orders to fill, albeit with extended delivery times.
Tianyu, a subsidiary of the world's largest fully-integrated wool top maker, is third on the buyers' list with 31,031 bales (11.8pc) bought at the WWC so far this season.
Although seventh on the buyers' list so far this season, Meliwa, which services mills in China, has in recent weeks joined Tianyu in buying more wool at the WWC.
Last week via Mr Brown's successful bidding, it was fourth on the WWC weekly buyers' list, behind Techwool, local trader PJ Morris Wools, and Tianyu and substantially ahead on quantity purchased of Swan Wool Processors and Endeavour Wool Exports in fifth and sixth places.
According to wool buyers and brokers, if there is anything on the horizon to dampen demand for wool, it may likely be whether the COVID lockdown of Shanghai is lifted at the end of this month as scheduled.
If the lockdown continues into June, that will be seen as a blow to business confidence, they said.
However, if the lockdown ends on schedule, buyers and brokers are confident that the backlog of shipping anchored off the Chinese coast will be cleared quickly and internal transport will also return to normal, removing at least part of the current delay problems in shipping wool to processors in China.
With only four more trading weeks, including this week, left in this season's selling program at the WWC, the Western Market Indicator, as a general guide to the strength of the local market, last week added 13 cents to the previous week's highest point in two years, to finish at 1515c per kilogram clean.
This compared to a 7c increase to 1434c/kg for the benchmark Eastern Market Indicator.
As in previous weeks, demand was particularly strong at the finer end of the fleece micron spectrum and for wool with less than 2pc vegetable matter contamination, but the main buyers appeared to be bidding across all micron segments.
Declared non-mulesed wool, particularly from recognised programs such as Responsible Wool Standard, also attracted stiff competition among bidders and apparent significant premium prices for woolgrowers.
Price rises were recorded across the board on the first trading day last week, except for 21 micron fleece which marked time at 1368c/kg.
On the second day, demand for 20 and 21 micron fleece ran out of steam and prices in both those segments eased - down 3c to 1446c/kg for 20 micron and down 5c to 1363c/kg for 21 micron, but over the week only the 21 micron segment lost ground.
This fluctuation of prices for particular micron segments on one trading day a week has also happened during three of the past four weeks without having any continuing detrimental impact on prices the following week.
Across the other micron segments, price rises for the week ranged from 12c (for 20 micron fleece) to 59c (to 2036c/kg for 18.5 micron fleece).
These increases took the WWC's 18.5 micron price guide and the 18 micron guide (at 2036c/kg) to their highest levels in two years and the Merino cardings indicator last week jumped back above 1000c/kg for the first time in two years.
The overall passed-in rate at WWC live auctions last week was 8.5pc, which compared to a national passed-in rate of 10.3pc.
Only 1.9pc of the initial WWC listing was withdrawn prior to auction, compared to 4.2pc withdrawn beforehand nationally.
This week the WWC offering is projected to increase by 749 bales to 7800, while the national offering is set to increase by 4621 to 46,392 bales which brokers have previously acknowledged is at the upper limit of the volume the market seems prepared to accept.
