Logistic issues dampen wool recovery

Shipping disruptions hamper wool's road to recovery

Sheep
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No wind beneath wool's sails as logistical issues threaten wool's road to recovery

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Gains over most Merino price guides off the back of solid demand helped the AWEX eastern market indicator lift this week, albeit a modest eight cent rise to finish at 1285 cents per kilogram, clean.

The northern indicator saw the biggest gains with an increase of 14c/kg to land at 1356c/kg.

The west were next, topping up by 13c to finish at 1346c/kg and the southern indicator had a smaller rise of 5c to close the week at 1241c/kg.

The national offering declined by 13.6 per cent after sellers withdrew bales from the original 46,578 offered.

The overall quantity fell to 38,564 bales, and although numbers were reduced, the bales available for auction this season continues to track well above the previous season, as wool on hold continues to find its way to market.

But according to industry experts, despite the market remaining relatively steady considering the reduced consumer access to wool, the ongoing logistics issues may obstruct any chance of wool prices lifting to higher levels.

Australian Wool Innovation trade spokesperson said delays in shipments are verging on chronic, with exporters receiving multiple cancellations which leads to weeks of hold-ups, tying up valuable finances.

"Reports indicate the notice time is extraordinarily short with wool dumped and ready to port being jettisoned off delivery and a new schedule 'subject to change' being issued," the spokesperson said.

"Some exporter's containers have been canned three times and are still awaiting discharge."

The shipping disruption effects the main export destination of China, but impacts are also being felt upon the Indian and European importers.

According to the AWI spokesperson, available vessels setting sail for those nations are much scarcer as well as available space on the limited number of vessels tightening.

This has a substantial effect on the market, because when these countries are in the auction room competing, the wool price is the receiver of the additional bidding.

This week main buyer interest was for good style wools, particularly those with favourable additional measurement results.

These wools generally sold at levels 10 to 30c above those achieved in the previous series and were the catalyst for the gains experienced in the individual Merino Price Guides (MPGs).

The MPGs across the country for 19.5 micron and finer gained between 5 and 42c.

The crossbred sector recorded minimal movements for the series, the crossbred MPGs in the eastern centres moved between -3 and +8 cents.

Next week's national offering increases with just under 49,000 bales on offer in Sydney, Fremantle and Melbourne.

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