The Australian wool business started off with a bang in February with prices jumping 3 percent on a local currency across virtually all fiber types in the first week, according to a Woolmark market report. The increase was helped by renewed strength in foreign markets, relatively tight supplies, and advantageous foreign exchange rates. New record levels of sales on most wool types was the highlight of the week in all three key Australian sales centers, with merino counts doing particularly well.
However, the excitement was short-lived, as forecasts of rapidly growing supply seemed to slow buyers’ willingness to pay the higher prices, particularly in the merino fleece sector, which went through a bit of an adjustment after the success of the prior week. Prices retreated, which caused some sellers to withdraw their supplies from the market. Non-merino sectors ended up faring pretty well, though optimism remained cautious heading into the Chinese New Year period, when Chinese demand softens.
By the end of the month, though prices had fallen a bit, they ended up 1.5%, or six cents per pound on a U.S. dollar basis, above January month-end levels. The Australian dollar began to strengthen, but there were some signs of relative stability on the demand side while supplies failed to surge by as much as some forecasts had predicted.