There were 38000 bales rostered for sale in all three centers this week. The market opened with a bang across all micron categories. The EMI has reached new highs in both AUD and USD terms and xbreds have surged higher. As we touched on last week we were unsure how the market would open after the recess as there are a lot of influencing factors at play. Hindsight is a wonderful thing and it has become clear that both China and India left themselves exposed with very low stocks and have simply had to come in and meet the market. Interestingly Australian exporters tried to tell the major Indian processors that the market wouldn’t be cheaper on the open, unfortunately for them they were banking on the opening sale being soft. They made the conscious decision to withhold their indent orders out of the market for the first week, which has meant they had double the amount of orders in a relatively small offering this week. This is what has put the fire under this market. I’ve touched on how indent orders work in this column before but in a nutshell they are quantity based orders, i.e they might want to buy 3 containers of a 20.0 micron type for the week, they simply give instruction to the buyers “to pay market rate” if the market keeps rising their limits rise with it and away we go. Throw an active China into the mix and there’s not enough wool to go around.
Word out of China is they have followed the market up, i.e after Wednesday’s strong close new business was done at the higher level pointing to some sustainability at least for the immediate term. The third dominant player, Italy and greater Europe is reported to be enjoying improved market conditions for yarn and fabric sales which is another very good sign particularly for Tasmanian quality.
The only category to buck the trend is the cardings, they were cheaper last week and unchanged this week, historically they’re still very good levels as we know.
To the prices. 18.0 micron closed on Wednesday at 2165 clean, 21.0’s closed at 1654 clean and 28.0 closed at 855 clean which is a staggering 10% gain for this category in less than 2 weeks.
We are seeing a lot of forward activity for 12 months out as growers look to lock in a portion at good money, even factoring in a relatively large discount to the spot market the forward money is still very attractive compared to the long term average.
There are only 37000 bales rostered for sale next week, it will be a Tuesday / Wednesday sale though due to annual industry meetings on the Thursday.
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