Australian wool auctions came under significant pressure this week due to extreme foreign exchange fluctuations and cautious sentiment among expo
This sharp currency movement, largely influenced by easing tensions between the US and China after key Chinese technology products were exempted from new tariffs, buoyed the Au$ but negatively impacted local wool prices. The Eastern Market Indicator (EMI) declined by 2.4 per cent for the week, while the Western Indicator recorded a steeper fall of 3.6 per cent, the Australian Wool Innovation (AWI) said in its commentary for week 42 of the current wool marketing season.
Australian wool prices fell this week amid sharp forex swings and cautious exporter sentiment.
The Au$ surged over 6 per cent against both the US dollar and yuan, impacting auction prices.
The Eastern and Western Market Indicators dropped 2.4 per cent and 3.6 per cent, respectively.
Merino fleece types declined 35–50 cents.
Despite reduced demand, ongoing manufacturing orders provided support.
While concerns over escalating US-China tariffs initially stoked fears of a global economic slowdown, the partial exemption announcement sparked a surge in the Au$’s value. However, as seen last week, the auction market did not fully mirror theoretical declines based on currency conversion alone. Instead, wool prices remained relatively resilient, with demand from prompt manufacturing orders and existing forward contracts helping sustain some market stability.
Merino fleece types experienced notable price corrections, falling by 35 to 50 Australian cents for the week. Most of this decline occurred on the first auction day, immediately after the opening lots set lower price benchmarks. Subsequent trading held mostly steady at those levels. The second day of sales showed signs of stabilisation, with better-quality wool types trading at firm prices and only lower-spec varieties registering further declines of 5 to 15 cents.
Despite reduced enquiry levels and slower conversion to new business, the presence of committed forward sales helped maintain a semblance of normalcy in the market. Traders noted that while the direction of price movement was relatively predictable, the extent of fluctuation remained difficult to gauge, the AWI commentary added.
Next week’s scheduled auction recess is seen as a timely opportunity for the market to absorb recent developments and await clearer macroeconomic signals. Stakeholders hope the pause will mitigate further risk and allow for more informed trading decisions in the coming weeks.
Fibre2Fashion News Desk (KD)
www.fibre2fashion.com