Wool Market Reports

Australian Merino growers hold clips as wool prices drop

Sheep Central February 26, 2021

AUSTRALIAN growers passed in almost 20 percent of the wool offered at auctions this week as the prices for all Merino lines fell this week.

Almost all Merino types and descriptions across the country sold at levels below those achieved in the previous week, with only 26-32 micron crossbred wool improving.

The Australian Wool Exchange said the price increases of last week encouraged more sellers to the market, pushing the national offering up by 4089 bales to 50,138, but growers passed in 18.4 percent of the offering.

AWEX said from the outset, it was evident that with the larger offering, buyers were not prepared to push prices higher. Instead, the buyers were selective in their purchases, trying to find value in a continually falling market.

By the end of the series, the individual Micron Price Guides (MPGs) across the country for 20.0 micron and finer dropped by between 5 and 68 cents. These losses contributed to a loss in the AWEX Eastern Market Indicator of 12 cents to 1306c/kg clean for the auction series.

Considering to a further strengthening of the Australian dollar — the A$ climbed by 2.12 cents this week — the market performed very well, AWEX said. When viewed in US dollars terms – which most overseas orders are traded in — the EMI rose by US18 cents, closing at US1040c/kg, a 1.8pc increase.

AWEX said the effect the US dollar has on the Australian wool market can be further highlighted, when comparing this sale to the corresponding sale of the previous season. Compared to this time last year, the Australian dollar has risen by US13.12 cents — a 19.7pc rise.

AWEX said the EMI when viewed in Australian dollars is 275 cents lower — a 17.4pc fall. However, when viewed in US dollar terms, the EMI has only fallen by US12 cents, a marginal 1.1pc reduction.

Crossbred wools were the only sector to record positive movements this series, with the crossbred MPGs across the country adding between 4 and 35 cents. The gains in this sector prevented the EMI from falling further than it did, AWEX said.

Exchange rate and delivery constraints impacting market

Australian Wool Innovation trade consultant Scott Carmody attributed the market movement — whereby the Australian dollar prices faltered but the US dollar prices kicked up — almost wholly  to the foreign exchange (forex) rate moving 2.8pc stronger.

“With the resulting weaker Merino fleece prices, the passed in rates soared to over 18pc with grower sellers unwilling to accept the lower prices on offer.

“Over 50,000 bales were offered and this made it easier for buyers to be more selective in their purchasing,” he said.

“Financial restraints on exporters, coupled with delayed and longer lag times for shipping have played their part on the market advance being shelved for the time being.

“Buyers are reporting an additional 12 days waiting time above normal on average for payments to be received and delivery being made into the Chinese main ports,” Mr Carmody said.

“Shipping companies and stevedores are under siege trying to cope with the heavy sea traffic at the moment.

“Up to three days additional are now required just for local loading as ports are inundated with work and problems surrounding the storage of the empty containers.”

Mr Carmody said as the prices are largely acceptable for most grower sellers at the moment, volumes at auction have steadily risen with the freshly shorn clip being supplemented by a good portion of “held” wools.

“The coming weeks sales are a good example as last Friday 39,000 bales had been scheduled, but by Monday 12pm that figure had escalated to almost 49,000 bales – which was a 26p increase just over the weekend.”

Mr Carmody said trading companies again dominated this weeks’ buying, as top makers generally stepped away from the market.

Next national week’s offering remains similar. There are currently 50,535 bales available to the trade, with all three centres in operation.

Click here for the latest AWEX Micron Price Guides.

Source: AWEX.


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