Wool market defies predictions of carnage - Elders Rural Services

Wool market defies predictions of carnage

Despite the predictions of carnage as some wool brokers swamped the showfloor and auction rooms with bales of wool, the market stood up rather well.

At the end of the three-day selling week the market had eased by 11 US cents, or roughly one per cent. In Aussie Dollar terms the price drop was actually less, thanks to a weaker exchange rate against the US Dollar, with only three-cents being shaved off the market indicator locally.

Superfine Merino indicators fared the worst, although there was some suggestion that it was a simple realignment of quotes after a stellar performance the previous week courtesy of some of the traditional Saxon Merino clips coming through the system. All of the medium Merino segments got through the week more or less unscathed, which was considered a big positive given the large volume of wool on offer, and the ongoing cash constraints being felt by just about every buying house.

Week two looms as another challenge with again over 50,000 bales on the roster, before everyone is able to settle back in their corner for the three-week recess. If the currency position holds, it is possible we may just scrape through with another repeat of this week’s market, although there will no doubt be some ups and downs for different types on the last day as buyers look to balance out orders and fill, but not overfill, their shipping containers.

Thankfully there will be a couple of the larger topmakers mopping up the odds and sods as they can usually find a home for most things – at a price.

Many brokers and private buying houses have used the last two weeks of sales to clear out the bulk class and interlot bins – although in the typical vagaries of the wool market, these two weeks are actually the first two weeks of the selling season, not the last two weeks – but that is just another one of those historical anomalies which exist in this industry.

As the Chinese domestic market cools, as normal at this time of year, it has been a welcome sight to see a bit more Italian and European activity.

Not huge quantities, but they make their presence felt in the auction room as always with high prices and dominant bidding for those lots which meet the typical Italian specs. Business is not booming in Italy, but with the recent yarn and fabric fairs being held, the Italian processors at least have had a chance to get together, talk to some customers, and instruct their suppliers to get a bit more raw material – just in case.

They are hoping for better things in the future, and as they display their yarns and fabric collections for the Autumn/Winter 2022/23 season there is a glimmer of hope that the coming season will be better than the last two disasters.

Superfine Merino understandably dominates much of the collection, although not exclusively, and there is a muttering about price levels given the extraordinary rise in price over the past six months, but in general people are accepting of current levels.

By far the biggest theme at both Pitti Filati Yarn and Idea Biella Fabric was that of “sustainability”. Despite covid, or perhaps because of it, the world of fashion is embracing the concept of treating the planet with a bit more respect. Customers have been demanding it for a while now, but it has reached a point that the marketers and designers have also got fully-on-board as well.

The phrase “sustainable fashion” has already become so ubiquitous in the industry, that along with terms such as “recycled” and “positive impact”, or “negative waste” consumers are starting to want more than just words.

Whilst many companies and brands have been proudly and loudly talking about how they are meeting certain environmental certificates, most importantly some companies have begun to quantify the impact across their full supply chains and taken strides to reduce their negative impost on the planet.

Whilst this poses some dangers for the Australian wool industry to ensure the measurements are correct and not misleading. The industry is hopefully now moving faster than the European Union bureaucrats and looking to establish true traceability and verification along the supply chain.

Already some of the Italian firms have moved a long way down this path – and like in their concept of style, it looks like they will set the tone for others to also follow in methodologies of verification. From past experience it is also likely that the Germans will then take it over and improve it in a technical sense, but then the rest of the world will wish they had thought of it, and so copy it.

Blockchain may well be the buzz-word in future conferences and exhibitions for the fashion industry, which is not something anyone would have envisaged even five years ago.

But, to connect the raw material producer in Australia with the processors in perhaps many different locations, as well as the logistics operations, moving slowly as they do at present, all the way to the final consumer with integrity is the missing link at present.

Block-chain facilitates the transfer of data, rather than maintaining a central repository, and ensures no-one can modify or manipulate anything along the journey to suit their own requirements. In short it can provide a defence against the “greenwashing” which is taking place presently, and make processes more efficient and transparent and highlight ethical and sustainable practices.

The Merino industry has a real and present need to embrace such technology to make sure the right story gets told, and the fibre maintains its pre-eminent position, or even advances a rung or two up the ladder.

This week’s market will no doubt be interesting, but the next year or two will be fascinating.

Article written by Bruce McLeish, Elders state wool manager, Queensland, for Queensland Country Life, 12 July 2021. Article reproduced with permission. 

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