Tough times eventually turn

THE Australian wool market was solid last week with the local currency proving very beneficial for growers and good buyer demand, particularly for better-tested wools. 

Superfine and ultrafine wools led the way with solid gains. 

The shortage of cashmere this year is certainly having an impact on the ultrafine clip with very handy returns – at last for these growers. 

European-spec wools are seen as the best value at present and they appear to be lining up for their share, even though the actual European mills are not yet in a positive frame of mind. 

Medium Merino wools fared pretty well with low supply of these wools making buyers aggressive both in the room and on Wooltrade, where a reasonable amount is listed for sale. 

Crossbred wools continue to drift a little lower, waiting for more positive market signals in what is the peak supply season for these wools. 

Knitwear types were steady although not leaping ahead as the stocks begin to build along the pipeline waiting for retail activity to fire. 

South Africa held its last sale for the year last week with just over 14,000 bales offered and the market there finished strongly with prices up by around 1 per cent. 

The premium for certified wools continued to edge up, providing a lead for Australia to follow. 

With South Africa in recess until January, apart from some greasy wool being offered in Argentina and Uruguay, Australia’s remaining auctions are the only avenue for early-stage processing mills to build stocks to cover the recess period. 

This should be enough to keep the market stable for the next couple of weeks even though demand is still insipid. 

It is getting easier to find people in the Chinese trade who are despondent about the outlook, but it tends to be those with smaller mills where a lack of cashflow is cramping their activity. 

Larger mills with buoyant sales teams, deep enough pockets to provide credit to customers, and enough experience to have weathered previous downturns are still positive. 

In the Chinese industry three decades is a long time, and many have never experienced a significant tough period without government assistance, so they are wondering what has gone wrong. 

Compare this to some of the Italian mills who have been in the game for more than 200 years, battled through a couple of world wars, a depression as well as the recent trials of Covid and Ukraine, and whilst they are not exactly jumping for joy they are not desperate either. 

Most have battened down the hatches, adjusted production and expectations to suit the current situation and are quietly making plans to launch new products and crank up again as soon as the forecasts begin to look promising. 

However, with a gloomy outlook for European economy, those Italian mills will be waiting a bit longer yet. 

Angst around the borders of Europe is keeping consumers nervous so the boffins in Brussels need to take some strong action to fire up their economy again. 

Rebuilding the European consumer economy may take a while, but it has been done before, several times, and no doubt the populace will get back on their feet and want to regain some of their sartorial splendour again. 

Adding to the demand for natural fibres will be an international conference in Korea where 175 countries are striving to find a way to end the plastic pollution problem before it totally engulfs the globe. Ensuring every delegate is wearing nothing but natural fibres would be a good start. 

So, there are positives on the horizon and 2025 will be a year of repair and restoration. 

The remainder of 2024 looks stable at worst.