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Australian wool auction market steadies with careful buyers

Sheep Central, October 8, 2021

AUSTRALIA’s wool auction market steadied this week led by careful Chinese demand reflecting ongoing power issues, with some European, Indian and Italian interest.

The Australian Wool Exchange said the market recorded a small overall increase, following the losses experienced in the previous series.

“The national offering reduced to 38,846 bales, due in part to last week’s lower prices.

“Despite this reduction, the overall offering this season continues to track well above the previous season,” AWEX said.

“Compared to the corresponding sale of the 2020/21 season, there has been 102,775 more bales offered through auction, an increase of 31.6 percent.

“Some exporters have anecdotally reported that some overseas clients have had to reduce production levels, due to power supply issues,” AWEX said.

“Despite this fact, the overall demand at this week’s sale was buoyant, resulting in good competition from the opening lot all the way to the final hammer.

“The finer microns attracted the most buyer support and as a result enjoyed the largest gains,” AWEX said.

“This was reflected in the individual Micron Price Guides (MPGs) for 18 microns and finer, which rose across the country by between 12 and 38 cents.

“All other Merino fleece MPGs recorded gains for the series, excluding the 19.5 micron MPG, which posted small losses in the Eastern centres,” AWEX said.

AWEX said the gains helped to push the AWEX Eastern Market Indicator (EMI) into positive territory for the series. It closed the week at 1339 cents/kg clean, a gain of 2 cents when compared to the previous week.

“Due to currency movement, the gain in US$ terms was higher, with the EMI adding US11 cents, closing the series at US975 cents.”

AWEX said the oddment sector was the poorest performing this series, with general losses of between 10 and 20 cents. This was reflected in the three Merino Carding Indicators (MC) which fell by an average of 12 cents for the week.

Chinese buyers acting under ‘extreme price sensitivity’ – AWI

Australian Wool Innovation trade consultant Scott Carmody said Chinese top makers and local export traders were all active, but appeared to be acting under stringent price sensitivity.

“Grower sellers were more readily accepting of the stability of prices on offer and a subsequent clearance rate of 88.6pc resulted, which is up from the 77.3pc of last week’s offering.”

Mr Carmody said the usually reliable pre-sale chatter arising from show floors appeared to have lost its radar in the past two weeks, with most buyers thoughts expecting the market to go in their favour during the week.

“At times the market did exhibit signs of pushing lower, but the underlying strength of competition soon arrested any further falls as other buyers soon stepped in to solidify the areas of weakness.”

Mr Carmody said Merino fleece types finer than 18.5 micron were the most sought after this week and improved 30-40 cents for the sale.

“The spinners and best top makers suited to the European processors just held values but are still trading at around 7 to 10pc premium to the equivalent micron price guides.

“All other wool types and descriptions sold at prices +/- 5 on established quotes,” he said.

“Western Australia was an exception as that market kicked up 10 to 20 cents on the final day after selling at rates close to the eastern markets initially.”

Mr Carmody said the major Chinese top maker topped the Merino fleece buyer lists with good support from our local trader exporters.

“European and Indian interest was also visible. Italy continues to dominate the better wools.”

Next week’s national offering increases as some cautious sellers are encouraged back to market. There are 42,755 bales catalogued to be offered in Sydney, Melbourne and Fremantle.

Click here to see the latest AWEX Micron Price Guides.

Sources: AWEX, AWI.

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