Wool market becalmed in a shabby world
IN foreign currency terms the decrease in the wool market was less in numerical terms but with a relatively stable currency market during the selling week it was refreshing for traders not to have to deal with that normal volatility as well. Until after auctions had closed, at least, when some soft data releases in the USA saw the Greenback slide and the Aussie Dollar hit a six month high.
Most major wool markets around the globe continue to be flat, and so despite very meagre offering volumes the wool market remains becalmed with negative overtones.
There are enough distractions going on in the global scene to distract everybody’s attention and focus from the real job of clothing the world in a better way.
Consumers remain reluctant to provide retailers with enough confidence that their existing stocks will move quickly, therefore discouraging them from placing new orders for the upcoming season.
Consumers seem to more focussed on travelling the globe than attending to their wardrobes at present, perhaps still in a Covid-revenge state of mind.
At some point they will hopefully turn to their personal presentation and realise that they have neglected their state of attire for far too long and that they look a bit shabby and are in need of a clothing refresh.
Once the outcome of the UK election has been sorted, and the French election, and the decision of a suitable Presidential candidate in the USA and the new bromance in Russia/North Korea, and of course a refreshing summer holiday for those in the Northern Hemisphere, consumers will hopefully focus on their wardrobes again.
Sport always has the ability to provide a feel good factor, and with the upcoming Olympics in Paris sales of active wear should see a spike as the budding athletes hit the pavement.
Retail performance is heavily reliant on confidence, and the industry desperately needs an injection of such to shrug off the doom and gloom which pervades much of the nightly news and social media feeds.
Trying to elicit enthusiasm from the wool trade at this time of year is always difficult, or virtually impossible unless the market is on fire.
European mills tend to be focussing on their upcoming holiday shutdowns, getting those orders produced which need to be done before the shutdown, and planning necessary maintenance which can only be done when the plant is turned off.
The quality of the offering tends to also be unfavourable as the new superfine clips are still walking around the paddock, and brokers’ stores have had a clean out with all the odds and sods hitting the market.
Some in the trade are beginning to wonder how much wool will build up during the recess given that the auction selling calendar has changed for the first time this year and the recess has been rolled back a couple of weeks to deal with the normal large volume in July.
This has simply not eventuated this year, for a number of reasons, so people are wondering if the market be swamped in late August and September.
Forecasts do not indicate a large volume at this stage, and certainly the current market conditions will not encourage growers to sell unless cash flow dictates otherwise.
So, while early stage processing mills are running down their appetite at present, September should see them hit peak production again and some of them are pondering whether to start building a reserve now or not.
Certainly the price decrease over the last two weeks has made this a little easier decision and there has been a slight uptick in buying activity from both India and China since the wool auctions closed.
Probably not enough yet to have a marked impact on next week’s auction, especially given the increase in the currency at present, but it does highlight the delicate balance between supply and demand.
This delicate balance is not unheard of, but usually there is a more defined market direction available whether it be up or down.
The futures market, as always, provides an indication of sentiment, and bid prices there are positive to the spot market for November onwards, and decidedly bullish for ’25 and into ’26.
For those in the business of running machinery and producing tops, yarn and fabric, however, the short to medium term is still undecided.
For export companies in Australia business has come to an almost complete standstill, so overheads are not being covered with only loss making sales opportunities available.
Indent buyers or direct orders from early stage processors are all that was keeping the lots moving in a subdued auction series this week, but with time, and hopefully an improvement in sentiment, the wheel will turn faster as we get closer to the recess.
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