Market Morsel: The Italian Job

Fibre | 23rd August 2021 | By Andrew Woods

Market Morsel

There was spirited bidding for “Italian” type wool again this week, with some Chinese topmakers stepping in to pick up what looks to be cheap wool. So far, the fall in price this month is about half of that seen at the same time in 2019 and 2020 for fleece. For pieces and bellies and fleece with higher vegetable fault the market is weaker, reflected in some extreme vegetable fault discounts.

It seems there has been new business done after sales had finished this week (with quite a few after sale clearances of passed in lots in Sydney) which proffers the prospect of prices stabilising next week, helped by lower offer volumes. The reduction of wool cleared to the trade through increased withdrawals and passed in rates has helped balance supply with demand in the short term.

The big drop in the iron ore prices will help to put some downward pressure on the exchange rate which in turn will help to cushion auction prices during this correction.

17 Micron

Italian demand is active, looking for 17 to 19 micron wool which fits their requirements. The good thing about this is that the Italian price ideas are at substantial premiums to the general market. In northern NSW the supply of good quality fine wool is set to return after a torrid two years, when drought impacted badly on wool quality.

19 Micron

While the 19 MPG is down a solid 6.5% on the closing levels of mid-July, it is still outperforming the past two years when the 19 MPG was down by 15% in mid-August for both 2019 and 2020. For lots with heavy vegetable fault the story is not quite so rosy, with very hefty discounts for these types. These discounts should ease as the market works its way through the spring and VM levels fall.

21 Micron

There were some high prices paid this week for RWS accredited 20 micron fleece. There is not a lot of volume of broader merino wool accredited to the RWS standard so any demand has to bid up for the limited offerings. When the exchange rate is taken into account the 21 MPG fell a hefty US50 cents this week, and is near a support level around US900 cents.

28 Micron

For crossbreds it was a case of following the lead of the merino market this week. While the downside for crossbred prices continues to appear very limited, the upside does as well.

Provided by Elders Wool. Prepared by Andrew Woods (Independent Commodity Services) with contributions from the Elders wool team.

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