It was a tough week in the office for the Australian wool market with all sectors across all three selling centres suffering substantial losses.
The only things that were up this week were the passed-in rate and weekly offering.
Industry specialists are now questioning how much of an impact the latest COVID Delta outbreak in China is having on Australian wool prices, amongst other factors.
Wool accumulated over the annual mid-year recess, pushing the national offering up to 49,181 bales, although the scheduled offering was much higher, about 57,000. Just over 7 per cent of the original selection was withdrawn prior to sale.
The Eastern Market Indicator (EMI) dropped by 56 cents to finish at 1372 cents per kilogram, clean, equating to a 3.9pc reduction.
Individual prices however, dropped from 2.5 to 5pc.
As the market opened in the Eastern centres, it was immediately apparent that the prices on offer were well below those achieved during the previous series.
Finer Merino fleece wool under 18.5-micron and crossbred fleece indicators recorded the largest falls, while medium wool types were more resilient and only fell by 2.5 to 3pc.
Finer microns came off by 136c in the south and 90c in the north.
Nothing was left unscathed as crossbred indicators gave up 21 to 38c and cardings fell 30c in Melbourne, 45c in Sydney with Fremantle giving up 61c for the week.
Melbourne felt the brunt of the fall, as they were the only centre operating over three days.
The price falls were reflected in the clearance rate with a third of all offered nationally passed in. Nationally 33.2pc of the offering failed to meet seller reserve.
By region, pass in rates averaged 40pc in the west, 34pc in the north and 30pc in the southern region.
Reports were demand from China was poor in comparison to the pre recess sentiment, but other origins such as India, Italy and the Czech Republic showed similar support to the market that was apparent pre-recess.
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According to executive director of the National Council of Wool Selling Brokers Paul Deane, the high volatility in prices can be explained.
He said the falls can be attributed to the combination of the large break between sales, high forecast offered volumes for the week and the added uncertainty from the latest outbreak of COVID in China.
"But the key question short-term is how long the uncertainty with the latest COVID Delta outbreaks across much of the Asia region, including China, persists," Mr Deane said.
"In particular the extent supply and trade supply chains might be disrupted, congestion and shipping costs increase is a near term threat."
Mr Deane said in recent days a worker testing positive to COVID has resulted in the closure of Ningdo Meidong container terminal in China.
The terminal is one of the newer and larger terminals in the Ningbo-Zhoushan complex which was the third busiest container port in the world for 2020.
According to Mr Deane the economic outlook in Asia has deteriorated in the short-term as the Delta variant sweeps through populations around the globe.
"The latest outbreak in China appears to be widespread and will impact the economy," he said.
"The short-term hit to economic growth in China will be directed at consumer spending, hospitality and travel in particular, as restrictions are applied."
"The curbs in China to control the latest outbreak are evident in travel indicators within the country, with the number of airline seats in China dropping by 30pc in one week during early August."
Next week's national offering reduces with 41,284 bales expected to be offered.
Sydney and Melbourne will sell over two days, Fremantle only requires only one day of selling (Tuesday).
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