AUSTRALIAN wool growers refused to sell clips en masse this week as prices take another dive and the auction market lost all of the gains of the past three weeks.
Merino fleece prices fell by 100-158c/kg and crossbred values by 45-90c/kg despite growers withdrawing 4000 or 11 percent of the bales catalogued before sales and passing in 33.4pc during auctions.
Australian Wool Innovation’s weekly market report said it appeared that appeared that the prompt demands of machinery for greasy wool have been minimally met for the immediate term.
And National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said he thought the volatility seen in the past two months would continue for the rest of the year, with prices rising and falling, in response to changes in offering volumes and short-term variation in raw wool demand.
AWEX senior market analyst Lionel Plunkett said the large price spike of the previous three weeks encouraged more sellers to the market, resulting in a significant increase in the national offering to 37,021 bales, up 9594 bales.
“Although the eastern markets recorded solid gains on the last day in the previous series, the western region selling last, recorded losses of between 30 and 70 cents.
“These losses were quickly realised in the east when markets opened and the losses were then compounded as the day progressed,” he said.
“By day’s end the individual Micron Price Guides (MPGs) in Sydney and Melbourne had fallen by 57 to 80 cents.
“On the back of these losses the AWEX Eastern Market Indicator (EMI) fell by 51 cents,” Mr Plunkett said.
“Having recorded earlier losses, the MPGs in the Fremantle region only fell by 30 to 36 cents.”
On the second selling day, the market to continue to track downward, Mr Plunkett said.
“The MPGs across all three centres fell by a further 32 to 93 cents.
The EMI fell by another 47 cents to close the week at 1511c/kg clean, losing 98 cents for the series, the largest weekly fall since the end of August this year, Mr Plunkett said.
“As in recent weeks, the sharp drop in price was met with firm seller resistance, this resulted in a national passed-in rate of 33.9pc, again the highest passed in figure since the large losses experienced at the end of August.
“The only sector to make positive movement was the cardings, modest price increases pushed the three carding indicators up by an average of 4 cents,” he said.
Trade waiting to see latest retail garment sales results – AWI
With the EMI in $US terms falling US72 cents to 1015c/kg, AWI’s weekly market report said the forex movement assisted buyers using $US, as the rate went 0.5pc in their favour.
But AWI said caution again reigns supreme, as the majority of the trade awaits the first retail garment data releases from the northern hemisphere autumn sales.
“These will be out mid-month and will highly likely determine the trajectory the wool market trends to for the next few months.”
AWI said the Chinese domestic and European consumer spending environment is key to the fortunes of upcoming wool to be sold.
“The focus will be upon the Chinese data, as that country is now estimated to use around 45pc of all wool product sold annually.
“The past ten years has seen that nation and the Australian wool industry incredibly intertwined, given not only the consumer consumption of the Peoples Republic of China, but also the provision of the processing capability of three quarters of our clip annually in China.”
AWI said traders generally topped the buying lists again this week, but as the price fell away, manufacturers came to the fore.
“Also some re-emergence of Chinese direct buying through indents became apparent.
“As the trading community and first stage processors have taken some heavy hits lately, the risk adverse mentality has increased to the point where exporters are unable to satisfy the full requirements of some type demands.”
AWI said overseas users will revert to the indent operations to take advantage of the falling price, but to also guarantee supply.
AWI said almost 60pc of the Merino fleece offering failed to meet grower reserves this week.
“This pressure did see a slight price lift towards the end of selling as buyers scrambled to fill prompt needs.”
Mr Plunkett said this week’s price reductions have left many sellers uncertain and the national offering for next week is currently 34,174 bales rostered.