Trade

Australian wool prices rebound as low spec lines close price gap

Sheep Central, March 13, 2015

wool bales dec15-14Australian wool prices rebounded this week, as the Australian dollar weakened and interest in ultra and superfine wools, and in lower spec types, increased.

AWEX senior market analyst Lionel Plunkett said the Eastern Market Indicator closed seven cents higher this week at 1092c/kg clean, breaking a four-week losing streak.

“The rise in the EMI in local currency terms was in contrast to a fall of 20 cents (to US829 cents) when converted to US cents,” he said.

Mr Plunkett said the Australian dollar continued to come under pressure this week, losing two cents and falling to a six-year low of 75.94 cents due to poor local economic data and strength in the US dollar. Brokers passed in 6.7 percent of the 42,960 bale offering.

The quality of the wool offered this week followed typical late-summer/early-autumn patterns with smaller amounts of best style and low vegetable matter (vm) content types, Mr Plunkett said.

“Despite the trend in quality the low spec types were well supported this week and narrowed the price-gap to the better spec types.

“The Micron Price Guides were all mostly 5 to 10 cents higher due largely to the strength in the lesser types,” he said.

“It was a similar pattern each day with steady gains posted on both Wednesday and Thursday.

“Mid-break discounts, which have been severe at times over the last few months, were less obvious as low mid-break types become more commonplace,” Mr Plunkett said.

“Crossbreds continued to improve and made fresh highs in the 30/32 micron ranges.”

But he said the 28 micron wool had the most support, with gains of 15 to 20 cents to only 60 cents shy of the highs reached in 2002.

“Merino Skirtings firmed 5 to 10 cents for the sale, while carding types closed at similar rates to the previous sale.

Forward-selling exporters lead the charge

Australian Wool Innovation trade consultant Scott Carmody said the renewed buying interest emanated from mainly the three largest forward selling exporters – Techwool Trading, PJ Morris, and Fox and Lillie — but strong support also came from the Chinese represented indent buyers.

“More manageable quantities of around the 43,000 bales mark combined with the ever weakening Australian dollar against the US dollar assisted the reversal of the drift downwards of the past month.”

As a result, 7ac/clean kg was added to the EMI (Eastern Market Indicator), to finish the week at 1092ac/clean kg.

Quality superfine and ultrafine wool hard to find

Mr Carmody said superfine (16.6 to 18.5micron) and ultrafine (16.5micron and finer) types are becoming increasingly harder to find, and the buyers of these types are starting to show some urgency in securing supply of these wools at their historically low prices.

“In very small offerings this week, the better types of 16.5 to 18.5 micron exhibiting good tensile strength and best top making to spinners’ style managed a solid 20ac/clean kg increase whilst their lesser counterparts added 5 to 10ac/clean kg.

“A smattering of ultrafine types with mainly mid-range strength readings (30 to 38nkt) met with stronger demand and 30 to 50ac/clean kg additions were made to the established quotations.”

He said fine and medium (18.6 to 22 micron) Merino fleece came under strong attention from all wool using nations and common gains of 10 to 15ac/clean/kg were extracted from the buyers’ pockets by the close of selling for the week.

Mr Carmody said the better type and description Merino skirtings had much better competition this sales series and good gains of up to 15ac/clean kg were achieved.

“Offerings are being subjected to some poor pieces and brokens lines coming through containing various amounts of cotted parts and jowl edges.

“Buyers are severely discounting these wool types, and grower sellers would do well to get their classer to remove such types into a separate line.”

Open-broken top wools lift 40 cents clean

Mr Carmody said the carding market remained largely unchanged to slightly cheaper once more, as overseas users adjust to the new higher levels that eventually have to be passed downstream and accepted through to the garment manufacturer.

“A notable exception was the sudden and rapid rise of up to 40ac/clean kg witnessed on all types suitable for open/broken top production.

“All these open top types 17 to 19 micron rose immediately selling commenced, and sold at the higher basis throughout,” he said.

“A small offering of open top types finer than 17 micron also appreciated by as much as 25ac/clean kg for the week.”

Mr Carmody said crossbred (25 to 32micron) and comeback types came back into favour this week as prices rose a solid 10 to 20ac/clean kg.

“Demand remains similar, but the weaker currency allowed those Chinese buyers using USD a few more Aussie cents to use in the sale rooms.

“Next week we have around 45,000 bales scheduled to be auctioned.  Given the strength of this week, a firm to dearer market should be expected.”

Sources: AWEX and Australian Wool Innovation.

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