The steady demand, limited wool volumes and exporter shipping requirements are in a fine balance at present, with only the stronger NZ dollar holding prices back compared to last sale on 6th March
Of the 6,300 bales on offer 78.5 percent were sold. Fine Crossbred Fleece and Shears 32 to 35 micron were firm to 1 percent cheaper.
Good and Average Style full fleece 36 micron and coarser were up to 2 percent cheaper with poor styles fully firm.
The Australian Bureau of Agricultural and Resource Economics (ABARES) has projected mix outlook for wool. ABARES foresees the EMI to move up once again in the short-to-medium term, averaging around 1,160 cents per kilogram for 2014-15 and remain at around 1,155 cents per kilogram in 2015-16.
By 2018-19, the EMI is projected to plunge to around 1,133 cents per kilo as graziers restock and production recovers.
After the recent downward pressure faced at the wool market, this week's auction of 7300 bales of South Island wool saw a firm to dearer market with an 86 per cent clearance rate. A continual flow of buyer interest with limited volumes of desirable wool types combined to balance the wool market
John Dawson, general manager of New Zealand Wool Services International Limited's said that the weighted indicator for the main trading currencies lifted slightly by 0.58 per cent, compared to the February 20 sale.
The flux performance in US exchange rate last week against the Australian dollar impacted the market and resulted in significant price dips across all selling centres. Also movements in the currency puts a bit of ambiguity out in the wool market, in particular for the traders because if they buy it this week and next week the currency is up or down it means they have cheap or expensive wool. The sudden fluctuations in the market had a big impact on trade.
The wool market has taken a sudden slump. The main setback has been China being reluctant to buy due to cuts in Government spending with volatile consumer confidence. Up to 80 per cent of Australia's wool goes to China, with 50 per cent of that going into local garments.
Lachie Brown, wool sales manager Elders in Victoria, China is likely to return to the market in the next month, with the Chinese New Year being partly to blame for lack of demand.
At the opening of this year’s auction season it was seen that too many wool growers tried to take advantage of a surge in the market.
Wool market moved up with the strong demand from Chinese. The Eastern Market Indicator regained most of its previous week's losses to close at 1128c/kg, up 17c/kg or 29c/kg more than the same time last year due to smaller volumes and higher demand.
According to the Australian Wool Exchange market report, the EMI is now only 1.5 per cent below the 12-month peak recorded in December.
Volumes fell almost 11,000 bales and there were strong orders from a large Chinese operator and exporters keen to finalise orders before the Chinese new year shutdown.
Wool market likely to improve at least by 5 percent in the eastern market indicator for the 2013-14 period as per the National Australia Bank projection.
The National Australia bank's latest outlook for wool is based on the market's strong performance late last year, the softening of the Australian dollar and an expected drop in wool supplies over the next few months
Head of NAB agribusiness for South and Western Australia, Matt O'Dea says the EMI should average just below 1100 cents per kilogram.
The value of wool exports have been falling since their peak in 2011
