Australian clip tops $1 billion mark – two months later

Sheep Central, December 13, 2019

Merino wool prices are expected to soften, but not fall sharply. Image – AWEX.

AUSTRALIA’S national wool auction turnover passed the $1 billion dollar value mark this week, two months later than last season.

The 42,542 bales sold this week were valued at $61.89 million, bringing the season’s total up to $1,007.36 million.

AWEX senior market analyst Lionel Plunkett said wool prices improved this week as the need to buy supplies pushed demand at auctions.

He said the Australian wool market managed to reverse the downward trend it was on, recording overall positive movements after three weeks of losses.

“There is only two selling weeks before the annual Christmas break and many exporters needed this week to complete orders in time for shipment dates.

“The need to buy wool helped push demand, the result was spirited bidding from the outset, pushing prices higher,” he said.

Mr Plunkett said all types and descriptions across all Merino microns enjoyed the increases, as buyers scrambled hard for quantity whilst available.

“The individual Micron Price Guides (MPGs) across the country recorded increases of between 7 and 45 cents, with the exception of the southern 18.5 micron MPG, which lost 19 cents.

“The rises in the MPGs helped to push the AWEX Eastern Market Indicator (EMI) up by 11 cents for the series, which closed the week at 1503 cents,” he said.

“The national turnover this season passed the one-billion dollar mark, this took seven more sales than the previous season, where the billion dollar amount was reached in Week 16.

Mr Plunkett said the skirtings also recorded overall positive movement for the series, generally between 10 and 20 cents.

“Although the skirtings posted gains for the week, there was a softening on the final day, generally 10 cents clean.

“In contrast to the previous series, where the oddments were the only sector to record increases, this series the oddments were the worst performing,” he said.

“General losses of between 10 and 25 cents resulted in average losses of 19 cents across the three regional carding indicators.”

Due to a National Auction Selling Committee (NASC) business rule, that there must be four business days between the final selling day and Christmas Day, and next week’s auction is selling on Tuesday / Wednesday to accommodate this rule, Mr Plunkett said.

China demand lifts prices – AWI

Australian Wool Innovation trade consultant Scott Carmody said although this week’s Australian wool auction sales produced little in the way of price variance, it was perhaps the most impressive performing sale of the season thus far.

“Many factors all appeared to be conspiring against the potential good fortune of the wool prices.

“Publicized larger volumes, adverse foreign exchange rates, the relative low quality of a large portion of the selection and the ever present influences of the global economy were the main pre-sale concerns,” he said.

“What resulted was quite the opposite.

“Most type sectors held ground strongly against the negativity and the largest segment of the market, the Merino fleece, gained upwards of 40 cents, dependent on the quality of the individual lot. Cardings were the sole category where prices drifted downward,” he said.

“To say buyer competition was strong would be understating the tone of the market as almost all operators showed some willingness.”

Mr Carmody said the issue of the large volume of 48,500 bales coming onto the market and maybe causing a negative reaction failed to materialize as published just the Friday before.

“Over the weekend, that quantity had diminished substantially by 12 percent or 6000 bales.

“The offered quantity ended up being a far more manageable 42,500 bales and combined with some hidden prompt demand that appeared, the market remained relatively unscathed and in places improved,” he said.

“The purchasing activity this week was dominated by the big players of each segment.

“The locally based traders to China led the buying lists on the Merino descriptions, with solid support from the Chinese top makers,” he said.

“The world’s largest top maker dominated the crossbred sector whilst the largest global carbo processor was atop the carding and oddment types.”

Mr Carmody said the passed in rate for the week was 10.7pc, with grower owners of Merino fleece still the largest user of this tool.

“Western Australian growers passed in over 20pc of their fleece whilst understandably the drought-affected growing zones of NSW saw a rate half of that.”

Mr Carmody said export figures from the Australian Bureau of Statistics for the season to date as at the end of October 2019 showed China remaining as the dominant buyer of Australia’s wool, buying 75.8pc of the clip.

“Italy is running second with 6.8pc of our wool export with India third with 5.5pc.

“The Czech Republic, South Korea and Egypt are next with 3.2pc, 2.1pc and 1.7pc respectively.”

Next week has a sales roster showing 39,430 bales up for sale. This will be the last sale week prior to a three week recess for the Christmas and New Year period.

Sources: AWEX, AWI.


Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.


Get Sheep Central's news headlines emailed to you -