AUSTRALIAN Merino wool prices have strengthened this week, despite a bigger bale offering and higher currency exchange rate.

The Australian Wool Exchange said the market returned after the one-week Easter recess, recording large gains for the second consecutive auction selling series.

AWEX said wool accumulated during the recess bolstered the national offering and 44,765 bales were offered, 8513 bales more than in the previous auction week.

“On the opening day, this larger offering attracted strong widespread competition, pushing prices higher from the outset.

“The largest gains were seen in the merino fleece types, particularly the better style, higher yielding, lower vegetable matter types and wool with favourable additional measurement results,” AWEX said.

“However, the lesser style types also enjoyed gains, as buyers fought hard for market share.

“These gains were reflected in the Micron Price Guides (MPGs), which rose between 11 and 61 cents nationally.”

AWEX said the benchmark Eastern Market Indicator (EMI) added 24 cents for the day.

“Due to a strengthening of the Australian dollar compared to the US currency, when viewed in USD terms the rise in the EMI was larger.

“The EMI gained US48 cents for the day, this was the largest daily rise in the EMI since January 13.”

AWEX said the second day of selling the market generally consolidated the rises of the previous day.

“There were varied changes in the MPGs, where the movements ranged between plus 47 and minus 30 cents.

“The EMI added 15 cents for the day.”

AWEX said the EMI closed the week 39 cents higher, finishing at 1825 cents/kg clean.

“The EMI has now added 86 cents over the last two selling series, easily covering the losses of the previous two series.

“The EMI now sits at its highest point since June 2019,” AWEX said.

“In USD terms, the EMI is at its highest point since July 2019.”

Strong buyer preference for quality – AWI

Australian Wool Innovation said the market returned strongly this week following the Easter recess, recording gains of 38 cents in the EMI and 35 cents in the Western Market Indicator.

“Despite a stronger Australian dollar, USD returns also improved, rising by 68 cents to 1302 cents and 77 cents to 1463 cents respectively.

“This has pushed the EMI to its highest level since June 2019, while USD returns are now at their highest since July 2019.”

AWI said the strength in USD terms highlights the underlying demand strength in the market, with buyers willing to absorb currency headwinds, particularly at elevated price levels.

AWI said finer types led the market this week, with average gains of 50–55 cents across the sales. Medium Merino wools showed similar strength, rising by 45 to 50 cents. Crossbred wools recorded more modest increases of 10–15 cents, while Merino cardings finished 15 to 20 cents dearer.

“The more subdued gains in crossbred types continue to highlight a divergence in demand, with stronger competition focused on finer Merino wools.”

AWI said pricing across all selling centres continued to highlight strong buyer preference for quality, with premiums for better style types remaining well supported.

“Discounts for higher vegetable matter, lower strength and shorter length wools remained significant, indicating an ongoing processor focus on performance and yield.

“This reinforces the current market structure, where demand is concentrated in higher specification Merino types, while broader and lower quality wools continue to trade at a relative discount.”

AWI said the short-term increase in supply did little to dampen competition, with strong buyer activity reflected in the low passed-in rate and solid clearance levels.

“This indicates that buyers were actively seeking volume rather than showing resistance at higher price levels.

“Next week’s offering is expected to fall by ~ 12,000 bales, a significant reduction that should look to provide continued support to current price levels.”

AWEX said next week’s national offering is expected to reduce significantly, despite the dearer market. There are currently 32,746 bales on offer in Sydney, Melbourne and Fremantle.

Sources – AWEX, AWI.