AUSTRALIAN wool prices finished at a record season-ending level this week, despite buyers pulling Merino rates back in expectation of larger auction offerings next month.

AWEX senior market analyst Lionel Plunkett said the benchmark AWEX Eastern Market Indicator finished the season at 1507c/kg clean, a fall of 26 cents for the week.

This was 210 cents higher (+16.2 percent) than the close of the previous season,” he said.

“It was the highest season-ending level on record.

“The average over the 12 months for the EMI was 1401 cents, 147 cents higher (+11.7pc) than 2015/16.”

Click here to get the latest Sheep Central story links sent to your email inbox.

Mr Plunkett said although the 2016/17 season came to a close this week with losses, “it really was a season of highs.”

“It was the fourth consecutive year where the average of the EMI increased in value, and the eighth increase over the past decade.

“Record prices were achieved for some microns, most recently 22 micron, which achieved this feat only two weeks ago.”

Brokers offered 36,886 bales this week, 14,588 more than last week, and 9.4pc of the offering was passed in.

Mr Plunkett said with more wool to choose from, buyers became more selective with their purchases, as a result the focus was on the best style and spec lots.

“Lesser style and spec wools were quickly discounted and the market began to fall.

“The biggest losses occurred on the first selling day, generally between 20 and 50 cents, pushing the EMI down 25 cents,” he said.

“The second day saw losses but not to the extreme seen on the first day.

“The EMI fell only 1 cent on the back of general losses of 5 to 15 cents.”

Mr Plunkett said the skirting market went against the trend of the fleece market.

“Skirting prices generally managed increases for the week, in particular 19.0 micron and coarser, which managed rises of up to 30 cents.”

He said the crossbred market experienced mixed results, with prices for 26-28 micron wool falling, while 30 micron and coarser lines managed to record increases for the week.

Buyers’ eyes on July offerings

Australian Wool Innovation’s weekly market report said the trading week commenced with buyers having eyes firmly planted on upcoming rostered quantities being advertised for the first two sales in July, more-so than the auction of this past week.

“The larger auction quantity of over 90,000 bales scheduled for those weeks, compared to 50,883 bales in weeks 50 and 51, released the pressure on immediate purchasing and the market somewhat suffered this week because of that.

“Brokers reported growers holding wool for sale into the new financial year as being the reason for such a disparity in offered volumes, but anecdotal accounts of when wool is actually deemed as being sold for taxation reasons is seemingly still variable,” AWI said.

“As buyers relaxed their purchasing strategies and intent in the early sessions of selling, Merino fleece prices retracted accordingly and alarmingly in some cases.

“Average super fine (finer than 18.5mic) types were most affected, and whilst general quotes indicated 50 to 70ac clean kg losses, some individual lots were well over 100ac lower than the previous sale,” AWI said.

AWI said volumes rather than demand was put up as the primary driver of prices retracting, and this was well and truly borne out with the resounding halt and recovery on the final day’s selling.

“Overseas users took advantage of the more advantageous prices available from exporters, and this demand transferred immediately into the auction rooms on Thursday almost completely stopping the slide in Merino fleece prices.

“In fact wool types broader than 19 were quoted by many as 10 to 15ac dearer for the day.”

AWI said the strengthened Australian dollar against the US currency, up about 1.38pc for the week, spooked many offshore buyers and this strong gain also perhaps persuaded a few to lock into some of the current prices.

“Whilst quantities are large in upcoming sales, (50,000+ next week) the world is in a period whereby basically Australia is the sole source of quantity for Merino fleece.

Fundamentally, demand is consistent and strong and given the strength seen at the close, markets should remain largely to the positive.”

AWI said 1,709,657 bales of Australian stored wool was sold this season, 56,937 bales more than were sold last season. Similarly, AWEX reported around 6.65pc more first-hand wool was offered at auction this past season, compared to 2015/16. Closing price levels were 16pc higher in $A terms and 20pc up in $US terms year-on-year.

Click here for the latest AWEX Micon Price Guides.

Sources: AWEX, AWI.