CROSSBRED wool prices continued to improve in auctions this week, but Merino fleece values lost ground.

The Australian Wool Exchange said the market has fallen for the second consecutive auction series, driven by weakness in the Merino fleece sector.

AQWEX said the sale offering was again relatively small, with just 29,705 bales available to the trade, 3350 fewer than last week. Brokers passed in 7 percent of the catalogue.

“This was the smallest sale since November.”

AWEX said all three centres in Fremantle, Yennora and Fremantle operated on the opening day.

“The Micron Price Guides (MPGs) for Merino fleece dropped by between 4 and 32 cents.

“Strength in the crossbreds was reflected in their MPGs which added between 2 and 42 cents.”

AWEX said the increases in the crossbred sector prevented a larger fall in the benchmark Eastern Market Indicator (EMI), which dropped by 8 cents for the day.

“On the second day only Sydney and Melbourne were selling, and the market performed in a very similar manner to the previous day, with the Merino fleece MPG movements ranging between plus 3 and minus 14 cents.”

AWEX said the crossbred sector again strengthened, helping to reduce the damage to the EMI, which dropped by 2 cents.

“Although the market has softened marginally over the previous two selling series, it is worthwhile noting that the market remains in a very strong overall position, when viewed over the previous five years.

“Looking at the Southern Percentile rankings, which rank the MPGs over the previous five years, 19 and 21 micron are currently 99, which means over this time they were below this price 99pc of the time.

“The Southern Merino Carding Indicator (MC) has a 100 percentile.”

AWEX said another thing worth noting is that although there have been 49,191 fewer bales sold through the auction system this season, the dollar amount of the wool offered is higher.

“Season to date there has been 2287 million dollars’ worth of wool sold, this is 546 million dollars more than last season.”

Merino wool buyers becoming more selective – AWI

Australian Wool Innovation said fall in the Eastern Market Indicator by AUD10 cents to 1876 c/kg clean was mirrored by the drop in the USD-denominated EMI, which also declined by US10 cents to US1358 c/kg clean.

The Western Market Indicator recorded the largest regional correction, falling A22 c/kg and US19 c/kg.

Merino fleece softened particularly through the medium Merino segment where buyer resistance was most evident, AWI said.

Fine Merino types (16.5-19m) generally eased by 15–20 cents, while the broader medium Merino categories (19.5-21m) experienced heavier losses of 25–30 cents across most selling centres. Despite the softer tone in fleece wool, the market remained selective rather than broadly weak, AWI said.

“Crossbred wool (25-32m) continued its recent positive momentum, posting gains of 20-25 cents in several categories, with the southern 25 micron (MPG) rising as much as 50 cents on the week.

“Carding indicators also strengthened, increasing between 5 and 18 cents depending on region, highlighting continued demand for lower-cost processing and blending wool,” AWI said.

“The resilience in these broader wool types helped offset further downside pressure in the Merino fleece market and prevented a larger fall in the EMI.”

AWI said the market is not retreating from wool broadly; buyers are instead becoming more selective at current fine wool price levels.

“This week’s result suggests mills are rotating into cheaper fibre blend categories such as crossbreds and cardings while resisting expensive fine Merino purchases, reflecting ongoing manufacturing margin pressure and a preference for lower input risk.

“The continued strength of the Australian dollar is also providing additional headwinds for exporters and offshore buyers, adding further caution to purchasing activity.”

Next week’s offering is forecast to increase. There is expected to be 31,334 bales on offer in Sydney, Melbourne and Fremantle.

Source – AWEX, AWI.