Wool prices dip on logistics, volume and currencies

Sheep Central, March 4, 2022

AUSTRALIA’S wool market recorded an overall loss this week, although there were some price increases in selective pockets, with certain types recording positive movements, the Australian Wool Exchange reported.

Inhibiting factors included currency exchange rates, larger volumes at auction and ongoing logistics issues, other analysts said.

“In the Merino fleece types, the movements in the Micron Price Guides (MPGs) across the country ranged between +14 cents on the 18 micron MPG in Fremantle, bringing it more in line with the other centres, and -50 cents on the 17 micron MPG in Melbourne, bringing it more in line with Sydney,” AWEX said.

“The skirting market was the strongest performing sector for the week, overall these types were generally fully firm to 15 cents dearer, with the exception of wool carrying more than 5.0% vegetable matter which eased slightly.”

AWEX said the crossbreds recorded minimal change, the MPGs for 26 to 30 micron ranged between -2 and +3 cents.

“By the end of the series, the various market movements had the net result of pushing the AWEX Eastern Market indicator (EMI) lower.

“The EMI dropped by 14 cents, closing the week at 1407 cents a kilogram clean.”

AWEX said due to currency movements  — the Australian dollar was US1.1 cents higher than in the previous series when viewed in US dollar terms — the market had an overall positive movement, with the EMI adding US5 cents for the series, closing at 1026 cents.

“Although the EMI has fallen away from its highest point of the 2022 calendar year  — the EMI reached 1449 cents in Week 31 — the EMI is still trading 49 cents higher than its opening level of the year and 97 cents above its level of the corresponding sale of the previous season.”

Volume, exchange rates and logistics – AWI

Australian Wool Innovation trade consultant Scott Carmody said large volumes and foreign exchange rates conspired against wool prices this week at the Australian wool auctions.

“Increases in wool value, in all currencies were recorded, except for the most important for Australian wool growers – the Australian dollar.

“The most significant forex appreciation was seen on the Euro v A$, as an almost 3 percent gain on forex alone had the active European operators revaluing their buying levels,” he said.

“The one millionth Australian bale of the season was sold this week compared to that figure being reached in Week 38 last season.”

Mr Carmody said in the dominant US$ and CNY trading rates, a 1.5pc gain on both against the A$ saw opportunities for local gains evaporate.

“In all instances, if rates of exchange had remained similar, the market would have seen AUD levels better, indicative of the stronger demand that exporters are reporting.

“As a result, the Eastern Market Indicator (EMI) finished 14ac lower this week to close selling at 1407ac/clean kg.”

He said a higher passed-in rate revealed the preparedness of grower sellers to hold if price expectations were not met. The Western Market Indicator (WMI) dropped 15ac to 1444ac/clean kg and just 84.7pc cleared to the trade.

“Logistics issues continue to hamper the “normal” trading of wool with shipping delays and hence payment delays obstructing full operations of all participants each week,” Mr Carmody said.

“In a positive, many key buyer exporters are commenting on how well the market has held on in their opinion, given those abnormal problems and the relentless 50,000 bale weekly offerings.

“Over in South Africa, due to similar logistical problems, the wool industry decided to halt auction sales for a week back in mid February — when 800 bales were due to be sold — in an attempt to help recoup exporter finances and assist shipments, allowing auctions to be given some chance of shaking off those outside shipping and financial influences,” he said.

Next week’s national offering remains relatively large, with 2342 more bales rostered than this week. 52,546 bales are currently expected to be offered nationally. Sale days will be Wednesday and Thursday due to a Monday public holiday in the Western region.

Click here for the latest AWEX Micron Price Guides.

Sources: AWEX, AWI.


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