AUSTRALIAN wool prices rebounded as supply dropped this week, despite a stronger Australian dollar and a lack of new fleece business.

The Australian Wool Exchange reported that after four weeks of successive overall losses, the auction market rebounded strongly, recording large price increases.

According to analysts, demand was underpinned by low inventories in the early-stage supply chain and the unexpectedly low bale offering this week, down 14,051 bales to 23,651 bales.

AWEX said this was the smallest three centre offering since Week 13 in 2020, during the COVID pandemic.

“In a completely opposite trend to the previous week, when the markets opened in the eastern centres it was clear that large price increases were on offer.

“The Micron Price Guides (MPGs) for Merino fleece across the country rose by between 30 and 75 cents,” AWEX said.

“Again, main buyer interest centred on good style, low vegetable matter (less than 1pc) wool and the largest price rises were seen in these types.

“However, all types and descriptions enjoyed rises as buyers fought hard to secure meaningful quantity in the smaller than normal sale.”

AWEX said most sellers were keen to accept the prices on offer and the national passed-in rate for the day was 1.8pc. In the Merino fleece, it was just 1.5pc and over the market for the week closed at 2pc.

The benchmark Eastern Market Indicator (EMI) rose by 36 cents for the day, the largest daily rise in the EMI since the 22nd of April, AWEX saidl.

“The EMI also recorded a healthy rise in USD terms, the EMI added US38 cents for the day, an increase of 3pc.

“On the second day only Sydney and Melbourne were in operation and the market generally continued to strengthen.”

AWEX said the Merino fleece MPG movements ranged between unchanged and plus 26 cents, with the only anomaly the 18.5 MPG in the north, which dropped by 15 cents.

“The EMI added a further 5 cents, closing at 1853 cents/kg clean.

“The crossbred sector also had a favourable week, the rises in this sector helped to push the EMI up to the levels achieved,” AWEX said.

Australian Council of Wool Exporters and Processors president Josh Lamb said the drop off in the bale offering this week after the first week back from the recess caught processors off-guard.

“With larger mills needing to keep up weekly volume, coupled with good support from traders, the smaller offering forced the market higher.”

New fleece business limited – AWI

Australian Wool Innovation said competition on the opening day pushed the market, with Merino categories rising between 30 and 75 cents and the EMI gaining 36 cents – its largest daily increase since late April.

“Buyers continued to favour good-style, low vegetable matter wool, although the strength extended across most descriptions as exporters competed to secure meaningful volume.

“The market generally remained firm on Wednesday, while crossbreds also improved, with the 28-micron indicators gaining 42 cents in Sydney and 45 cents in Melbourne,” AWI said.

“The trade reported new fleece business remains limited, although domestic Chinese demand continues strongly with low inventory levels through the early-stage supply chain.

“This provided a level of confidence among exporters following the firmer close last week – and while completed sales remained slow, buying interest had strengthened once the market found that lower-level last week,” AWI said.

“With around 26,000 bales forecast for Week 10, restricted supply is likely to remain an important influence on short-term price direction.

“However, subdued fresh export business and a stronger Australian dollar suggest the market remains vulnerable to further volatility rather than signalling a clear demand-led trend.”

There is currently expected to be 26,000 bales on offer next week, in Sydney, Melbourne and Fremantle.

Sources – AWEX, AWI, ACWEP.