Impact of China-US trade deal on wool still uncertain

Still unclear if Trump trade deal with China will lift our wool market

Wool
LOOKING FOR STABILITY: The wool market will be looking for signs of stability as this week's wool sales unfold in Sydney, Melbourne and Fremantle.

LOOKING FOR STABILITY: The wool market will be looking for signs of stability as this week's wool sales unfold in Sydney, Melbourne and Fremantle.

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Strong hopes for another wool price rise at the Melbourne sale today didn't eventuate with the EMI losing 14 cents a kilogram clean.

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Last week's new China-US trade deal hasn't removed uncertainty from the wool market judging by the 14 cents a kilogram clean slide in the Eastern Market Indicator at Tuesday's sale in Melbourne.

The EMI tumbled below the 1600c barrier to finish the day on 1595c.

Merino fleece 19 microns and finer dropped by 40 to 50c a kg when selling started on the 9100-bale catalogue but recovered in the final hour to finish 15c lower.

Wools 17 micron and finer actually finished 5-10c dearer.

The story was the same for 19.5 microns and broader which initially fell and then recovered to close with an overall loss of 35-40c.

Merino skirtings with low vegetable matter were 20c dearer for 18.5 and finer and unchanged for broader microns.

The market will get a real test today (Wednesday) with 24,782 bales rostered for sale in Melbourne, Sydney and Fremantle.

While last week's new economic and trade agreement between America and China didn't scrub the additional 15pc tariff slapped on wool clothing imports from China by Donald Trump last September, market pundits were hoping the deal would restore some confidence to the Chinese wool textile industry.

But Wes McNaughton, trading manager at major wool broking and buying house, Fox & Lillie, said the market was lacking direction from global consumers.

As a result mills were buying just enough wool to keep their wheels turning "as slow as possible", he said.

"The market is in a bit of limbo while people work out what is going on," he said.

Mr McNaughton said Chinese consumers, who had driven prices to record levels during the stunning 2018 market hike, were suspicious about the US-China trade deal.

He said the market needed Chinese consumers to come "pouring back" to wool.

Chris Wilcox, executive director of the National Council of Wool Selling Brokers of Australia, wasn't so pessimistic about the outlook and was hopeful the market may have hit bottom and would now edge its way back up onto a "reasonably solid base for prices".

Mr Wilcox said the industry was also still trying to get an accurate picture of sheep losses caused by the bushfires but Kangaroo Island, which was ravaged, was a major wool producer.

Last week's resumption in wool sales after the Christmas recess saw the EMI gain 51c to finish on 1609c although the market was erratic.

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