Australian wool prices break through 1700 cent benchmark indicator barrier

Sheep Central, December 15, 2017

URGENT pre-Christmas buying pushed Australian wool prices to an all-time peak this week, led by some fine wool prices posting gains of 100c/kg clean.

AWEX senior market analyst Lionel Plunkett said with the annual three-week Christmas recess about to begin, sales this week were the final opportunities for buyers to secure significant quantities of wool in 2017.

Prices generally rose 40-90 cents, with the AWEX Eastern Market Indicator closing 61 cents higher at 1760c/kg clean, and brokers passing in just 2.3 percent of the 50,913-bale offering. The EMI in $US terms rose 67 cents to US1350c/kg clean as the $A-US exchange rate lifted 1.2 cents to US76.70 cents during the week.

“The upcoming break, combined with intense buyer interest, created a “perfect storm” in the market place,” Mr Plunkett said.

“All types and descriptions, across the entire Merino spectrum experienced sharp price increases.

“The rises were felt from the opening hammer on the first selling day and continued unabated until the beginning of the final day, when buyers finally became more selective in their purchases, stabilising prices,” Mr Plunkett said.

“Notably, this is the first time the EMI has broken through the 1700-cent barrier.

“The EMI has added 405 cents for the year, an annual increase of 29.9pc, the largest amount since 2002.”

Mr Plunkett said the total amount of wool sold surpassed the $3billion mark this calendar year for the first time since our records began in 1995.

“The EMI has posted rises for the past three calendar years totalling 701 cents.

“The micron price guides for 16.5 microns all the way through to 22 microns hit record highs in all centres on Wednesday, before softening slightly on the Thursday.”

Mr Plunkett said the skirting market also made significant gains, recording general increases of 40 to 60 cents.

Crossbred wools also managed further price rises this week, but not at the same extent as their merino cousins. Prices generally rose by 30 to 40 cents. The oddment market continued its strong upward trend.

Mr Plunkett said the Merino carding indicators which were already sitting at all-time highs, added an average of 47 cents each this week.

Market fundamentals point to upside in 2018

The Australian Wool Innovation weekly market report said the market sentiment for the week was that prices still had room to grow, and from the start of selling, competition was high to secure bales before the Christmas break.

“With record high wool prices and many growers now entering a 6-8 month shearing pattern, there is some uncertainty regarding the availability for some wool types in the New Year and so competition was high to secure them before the break.

“The fundamentals ruling the wool trade at present of growing demand, lack of global stocks in front of machines and affirmative consumer sentiment for wool items continues to remain firmly in play,” AWI said.

“This may well point Australian wool prices to further positive territory into the New Year and see growers receiving just rewards for their efforts.

The market now takes a three-week break, sales resume in the week beginning January 8.

Sources: AWEX, AWI.


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