Auction markets returned to their usual 2 day Wednesday &Thursday rotation this week after last weeks Australia Day holiday.
The market in Melbourne followed on from the solid finish last week and retraced the small steps lost in early selling from the previous week. Again it was the finer Merino types that lead the way, with the better specified “European” types leading the way.
The average top making types were more irregular, with high mid break, overlong fleece lots less sought after.
Continuing on with the fleece commentary, it seems 19.5 and broader has hit a bit of a wall now, again the spinners types selling well, with poorer lots in and out in price.
Looking now at what might happen over the coming months, I think that overall supply and demand is going to continue to split the market into three or for sections and determine the market direction. Firstly we have the sub 18.5 micron types. There is likely to be less wool coming to market in this category. The season has improved dramatically, therefore the wool produced will be broader. There has been a shift in breeding direction, with producers looking to increase productivity, again increasing the micron and finally there is now some genuine demand for these superfine types again. Therefore I think it is perfectly feasible that the fine and superfine wools continue to improve in price…hopefully.
Then we have the broader merino types. For many of the same reasons as outlined above, I think we could see 20 micron and broader come under a bit of pressure? There will be an increase in supply for one, plus the current price is actually very high relative to their finer counterparts.
Then we have the crossbred market. Unfortunately I don’t see a lot of joy here. While I think we have already seen the major correction with the market returning to more “normal” levels, as supply increases and demand wanes, I cannot see a significant improvement for some time? This is being mirrored in NZ, the worlds largest producer of crossbred wool.
While everything I have outlined here is simply just an opinion, I do think we are in for some good times in the wool industry for a while yet.
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