Trade

Australian wool market ends season under cloud of uncertainty

Sheep Central, June 26, 2015

wool bales1AUSTRALIAN wool auctions ended the fiscal year and wool season under a cloud of uncertainty, as the market was flooded with unexpected quantities of wool for sale, trade consultant Scott Carmody said in AWI’s Weekly Wool Market Review.

“The season saw an average EMI of 1099c/kg clean for the 12 months, which represents a season to season average increase on returns for all wool sold of 3pc.

“For overseas buyers using US dollars, the season’s prices also went to their favour, with the EMI averaging US916c/kg clean, down 6.6pc from the previous season, due entirely to the rapid depreciation in the $A-US exchange (rate).”

Buyers reacted severely to increased bale offerings

Mr Carmody said wool buyers, exporters and wool users reacted severely this week to the heavily increased volume of wool hitting the market.

“Concerns were not just about this week, but also for the additional wool scheduled for sale in the next two sales before the annual mid-year recess in selling.

“The primary issue was the late notice of the staggering 38pc more wool this week and the 21pc increase next week,” he said.

“In real terms this means the trade had to suddenly find the capital to fund a potential A$33 million more in auction purchasing at the time of year where finances are usually being settled, not sought for.”

Merino wools back 50-80c/kg clean

Mr Carmody said market prices this week for all Merino fleece types were quoted as being a general 50-80c/kg clean cheaper for the week.

“Once more the spinners/best top making style, high strength super fine (finer than 18.5 micron) wools remained well sought and drifted only slightly avoiding the falls experienced by all other wools in the sector.

“Skirtings of all Merino descriptions followed the downward trend set by the fleece segment and by week’s end had showed a negative result of around 60c/kg clean,” he said.

“Merino cardings showed remarkable resistance to the dramatic drop in other areas of the wool market and recorded relatively minor losses of around 15c/kg clean, proof of the strong demand that continues to play out in the cardings offerings.

“The smaller offering in the crossbred (26-32 micron) sector sold to vastly cheaper price levels and by as much as 60c/kg clean in some cases.”

Crossbreds were hardest hit

Mr Carmody said in percentage terms, crossbreds were the hardest hit area of the market, with the heaviest retractions being at the finest and broadest extremes of the selection.

Next week Australian wool auctions will offer more than 49,000 bales at all three selling centres, and mainly in Sydney and Fremantle, after initial estimates released last Friday of around 39,000 bales proved erroneous.

“Hopefully all buyers, here and overseas, have managed to find the additional funds required and are then able to participate fully in the market up to the recess, as no doubt there will be more serious buying intent from overseas brought about by the lower prices and the underlying strength in demand for Australian wool.”

Source: AWI Weekly Wool Market Review.

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