Australian wool prices rebound after three-week break

Sheep Central, January 17, 2020

Merino wool prices lifted by more than 100 cents in early sales this week. Image – AWEX.

MERINO wool prices improved by up to more than 100 cents a kilogram this week, as several buyers “attacked” the offering in the first Australian auctions after the annual three-week Christmas recess.

AWEX senior market analyst Lionel Plunkett said the first sale of the new calendar year was another volatile one, with large price fluctuations across the series.

“This sale is traditionally a larger one and this year the national offering was 52,261 bales.

“As a three-day sale was required in Melbourne due to the large quantity, Sydney sold in the unusual pattern of Tuesday/Wednesday to avoid Melbourne selling in isolation,” he said.

“From the opening hammer on the first day of selling, it was immediately apparent that large price increases were on the cards.

“By day’s end all types and descriptions across all merino microns rose by 90 to 140 cents,” Mr Plunkett said.

“On the back of these rises, the individual Merino Price Guides (MPGs) in Sydney and Melbourne jumped by 93 to 135 cents.

“These increases helped to push the AWEX Eastern Market Indicator (EMI) up by 79 cents, the largest daily rise in the EMI since September last year.”

Mr Plunkett said all three centres were in operation on the second selling day.

“As the Western region missed out on the price rises of the previous day, the Fremantle market opened very strongly, with general price rises of 90 to 100 cents.

“However, midway through the sale, buyers started to continually reduce their limits as they accumulated wool. By the end of the day the price rises had almost completely deteriorated.”

The downward trend experienced in the west was continued when Melbourne opened on the final day, so much so that the southern MPGs for 17.5 micron and coarser fell by 27 to 77 cents,” Mr Plunkett said.

“The EMI lost 34 cents for the day.

“Despite the final day losses, the EMI still recorded overall positive movement for the series, adding 51 cents for the week, to close at 1609 cents/kg clean.”

Buyers attacked sale catalogues – AWI

In his weekly Australian Wool Innovation market report, trade consultant Scott Carmody said initial concerns re the very large quantity on offer proved unfounded as several buyers attacked the catalogues from the opening lot of selling.

“Three digit gains in values of mainly the Merino fleece sector were commonplace by the first hour.”

He said the three-week break had obviously created some pent up demand, but from all reports, the manufacturing situation in China particularly has recorded better than expected figures in the last quarter of 2019.

“Confidence appears to be on the improve and as the global economy swings further to the resolution of issues such as Brexit and the USA v China trade imbalance dispute this should only improve.”

“As is prone to happen at times in the free market situation that wool trading exists in, the weeks activity was overshadowed by erratic price movements.

“In reality, such fluctuations do not help stability of trade at any level of the pipeline and in fact can be at times more towards the detrimental,” he said.

“Variations of around 100c/kg clean in returned values were recorded this week and entirely dependent on the timing of the sale, not a reflection of true market forces but more so of human issues.

“Somewhat surprising on the surface was the pass-in rate of 10.5 percent, despite the positive gains.

“When looked at closely though, this figure was some contribution from the crossbreds which failed to fire, but mainly from the Merino sector in Western Australia, which failed to reach anywhere near the highs of the Eastern markets of Sydney and Melbourne and were subsequently passed in.”

Next week’s national offering increases to 59,890 bales.

Sources: AWEX, AWI.


Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.


Get Sheep Central's news headlines emailed to you -