AUSTRALIAN wool prices were this week unable to maintain their upward path and build on last week’s strong gains, and most categories recorded losses.
The Australian Wool Exchange said the rises in the previous series encouraged more sellers to the market, pushing the offering higher.
The national auctions offered 42,117 bales this week, an increase of 7180 bales, but brokers passed in 21 percent.
“Toward the end of the final selling day last week, there was a noticeable softening in buyer sentiment, as a result the market was only barely maintaining the prices on offer.
“This softer tone has carried into this week and from the outset the prices on offer were well below those achieved at the previous sale,” AWEX said.
“The largest falls were recorded on the opening day of selling.
“By the end of the first day the individual Micron Price Guides (MPGs) for Merino fleece across the country had dropped by between 12 and 76 cents.”
AWEX said these falls combined with losses in all other sectors to push the AWEX Eastern Market Indicator (EMI) down by 29 cents for the day.
“The second day of selling the market behaved differently within the three centres.
“In Sydney the market generally recorded minimal losses, the northern MPGs ranged between +5 and -13 cents,” AWEX said.
“In Melbourne, the finer microns lost further ground, and the southern MPGs for 19 micron and finer dropped another 11 to 55 cents, while 19.5 micron and coarser wools gained between 4 and 8 cents.
“Selling last, Fremantle had positive movements across the board and the western MPGs added between 1 and 6 cents for the day.”
AWEX said the EMI lost a further 7 cents, losing a total of 36 cents for the series to close the week at 1333 cents/kg clean.
Market follows Chinese bidding – AWI
Australian Wool Innovation trade consultant Scott Carmody said the overall lack of enthusiasm from most buying sectors from the outset of selling resulted in losses recorded against all wool types.
“Buyer confidence was dampened by a sudden slowing of Chinese prompt demand and most operators reverted to risk averse operations once more and active only to completion of forwards and new bids.”
Mr Carmody said on the back of generally slow enquiry for new business, negative price outcomes were widely predicted early in the week.
“To a large extent the market actually out-performed those pre-sale thoughts.
“Most expectations pointed to the market giving back all of the previous weeks’ gains, but as it turned out, half of the gains made last week in US dollar values were held onto,” he said.
“US$ prices rather than A$ is predominantly a better pointer to demand from China.”
Mr Carmody said Chinese top makers stepped back from their usual market participation on the first day of selling, but local traders, European spinners and top makers, and Indian interests, remained active.
“As those Chinese operators upped their buying on the final day, prices consolidated, particularly on types broader than 18 micron, but some heavier falls at the finer end continued.”
Next week’s national offering reduces slightly, due in part to the softer market, with 40,276 bales currently expected to be offered in Sydney, Melbourne and Fremantle.
Sources: AWI and AWEX.