AUSTRALIAN wool prices rose this week for a reduced offering, led mainly by Chinese demand.
AWEX senior market analyst Lionel Plunkett said after five weeks of successive losses the wool market recorded positive movement, with all sectors posting gains.
With Sydney and Fremantle only requiring one day of selling, the national quantity reduced to 19,654 bales – 9345 fewer than last week – and growers passed in just 5.7 percent.
Mr Plunkett said sales opened on Tuesday in Sydney and Melbourne.
“The reduced offering attracted spirited bidding from the outset and the increased buyer sentiment pushed prices higher.
“By the end of the first day, the individual Merino fleece Micron Price Guides (MPGs) in the eastern centres had risen by 27 to 53 cents,” he said.
“On the back of these rises the AWEX Eastern Market Indicator gained 39 cents for the day, a rise of 4.5pc.
“In percentage terms, this was the largest rise in the EMI since January.”
Mr Plunkett said on the second day of selling, only Melbourne and Fremantle operated.
“As Fremantle did not enjoy the rises of the previous day, the MPGs in the west gained 25 to 39 cents.
“Melbourne however, could not sustain its upward movement and the southern Merino fleece MPGs lost between 1 and 22 cents.”
Mr Plunkett said the EMI lost 7 cents for the day, but still managed an overall positive movement for the week, gaining 32 cents for the series, closing at 890 cents.
He said the skirtings followed a similar path to the fleece, and most types and descriptions generally added 30 to 40 cents for the week.
“The crossbreds enjoyed the largest gains (in percentage terms) this series, and the 26 to 30 micron MPGs gained 25 to 46 cents.
“All three Merino Carding Indicators (MC) also recorded positive movement this week.”
All wool types under buying pressure – AWI
Australian Wool Innovation trade consultant Scott Carmody said all types and descriptions came under heavy buying pressure this week at the auctions.
“Stimulus for the appreciating market came almost exclusively from genuine demand from the Chinese manufacturing sector.
“Relatively widespread enquiry late last week had reportedly been converted into new business for traders and the delivery period pretty tight, so inroads into covering those contracts had to be made,” he said.
Mr Carmody said the EMI in US$ gained US12 cents or 1.8pc to US643c/kg clean as the more advantageous forex (foreign exchange) rate dampened further rises in that currency helping the overseas buyers stay in the market.
“Exporters facing harder and leaner times need to cover off risk quickly to maintain the funding of overheads in this period of diminished opportunities of trade, whilst attempting profitable conclusions to those limited firm orders available currently.
“Last week’s business was the first real options to arise for the best part of two months so the pencils were sharpened and new contracts written,” Mr Carmody said.
“This new business coincided with a sale week that had only small volumes available of less than 20,000 bales nationally.
“Auction activity pressure was transferred to the buyer side and prices turned to the positive.”
Mr Carmody said the weaker A$ against the US$ helped the local auction price as that rate dropped almost 2pc week-on-week.
“Stiff competition ensued across all three selling centres but also the willingness of grower sellers to keep moving wool through the chain was highlighted with the 94pc clearance rate at auction.”
Mr Carmody said local traders were dominant, with the Chinese indents and top maker buying strength subdued at best and seemingly concentrating their attention towards the lower types.
The national offering increases to 33,558 bales next week. Fremantle will only sell on Wednesday and Sydney and Melbourne will operate on Tuesday and Wednesday.
Sources: AWEX, AWI.