SOME of Australia’s remaining wool growers sent a clear message to buyers this week, with more than 16 percent of the bale offering passed in at auctions nationally.

In the first week back after the three-week mid-year recess, the Australian Wool Exchange reported a 61 cent drop in the benchmark Eastern Market Indicator to 1816c/kg clean.

AWEX said brokers offered 37,702 bales, 5951 more than the last week before the recess, and 16.3pc were passed in.

“The total number of bales offered this season is 151,902 bales, this is 7,931 bales less than the previous season, a drop of 5 percent.”

When the market opened in the eastern auction centres, AWEX said it was immediately apparent that the prices being achieved were well below those on offer at the previous sales.

“The Micron Price Guides (MPGs) for Merino fleece dropped by between 16 and 107 cents for the day.

“Understandably the passed-in rate for the first day was higher than normal as many sellers were not prepared to accept the lower prices on offer,” AWEX said.

“28.2pc of the fleece failed to reach seller reserve and 19.5pc of the total offering (on the first day) was passed in.”

AWEX said the benchmark EMI dropped by 51 cents for the day, the largest daily fall in the EMI since October 2020, equating to a 2.7pc drop.

“Currency played a part in the price reductions, but the EMI also fell in US dollar terms, and the EMI dropped by US17 cents, a 1.3pc drop.

“On the second day, only Sydney and Melbourne were in operation and the market settled to a degree, with the prices on offer generally close to those of the previous day; however, the market did lose further ground overall,” AWEX said.

“The movements in the Merino fleece MPGs ranged between plus 6 and minus 56 cents.

“The EMI dropped another 10 cents, and closed the week 61 cents lower at 1812 cents, a weekly fall of 3.3pc.”

In USD terms, AWEX said the EMI fell by US28 cents for the week, a reduction of 2.1pc.

Correction was expected – AWI

Australian Wool Innovation said currency fluctuations added an additional headwind that amplified an already uncertain market.

“Most of the damage occurred on Tuesday, when the EMI fell 51 cents – its largest daily decline since October 2020 – before easing a further 10 cents on Wednesday.

“Merino fleece bore the brunt of the correction,” AWI said.

“On the opening day, Merino Micron Price Guides (MPGs) fell by between 16 and 107 cents, with further mixed movements on Wednesday ranging from 6 cents dearer to 56 cents cheaper.

“Weekly losses were substantial across both fine and medium Merinos, including falls of more than 100 cents for some 21 micron indicators,” AWI said.

“Seller resistance increased accordingly, particularly in Fremantle, where 29.6pc of the total offering and 37.9pc of Merino fleece was passed in.

“Crossbreds were comparatively resilient, with the 28-micron MPG unchanged in Melbourne and just 12 cents lower in Sydney.”

AWI said the magnitude of the opening correction was broadly in line with pre-sale expectations, following subdued new exporter business and the market’s sharp rise over the preceding year.

“Despite this week’s fall, the EMI remains 565 cents, or 45.3%, above its level a year ago,” AWI said.

AWEX said next week’s offering is forecast to reduce to 26,040 bales in Sydney, Melbourne and Fremantle.

Sources – AWEX, AWI.