AUSTRALIAN wool prices edged higher this week on the back of improved Chinese demand, and despite a stronger currency, a larger offering and global turmoil.

However, the Australian Wool Exchange said the market showed weakness toward the end of the auction selling series.

“The large price rises on offer during the previous week encouraged more sellers to the market, bolstering the national offering.

“There was a total of 45,476 bales (8264 more) available to the trade,” AWEX said.

“On the opening selling day (Tuesday) only Sydney and Fremantle were in operation, as Melbourne shifted to a Wednesday/Thursday selling pattern to accommodate a Monday Public Holiday.

“Despite many industry observers predicting a weaker market, the Sydney fleece market opened extremely strongly and by the end of the day, the Micron Price Guides in the north had risen by between 49 and 78 cents.”

AWEX said by contrast, the Fremantle market was more subdued and the MPGs finished the day between 10 and 26 cents higher.

“The 29-cent rise in the northern Indicator was enough to push the benchmark Eastern Market Indicator (EMI) up by 12 cents.”

AWEX said on the second day (Wednesday) all three centres were in operation.

“The Melbourne market played catch up with the other two centres, recording increases in all Merino fleece MPGs, of between 1 and 30 cents.

“Sydney and Fremantle were unable to maintain the upward trajectory, recording falls across all their MPGs, between 3 and 35 cents,” AWEX said.

“Despite the falls in the north, the rises in the south were enough to push the EMI higher again, this time by 6 cents.

“This rise marked the twelfth selling day in a row where the EMI rose, equalling the fifth highest run on record,” AWEX said.

On the final day (Thursday), with sales only in Melbourne, generally small losses were recorded, with EMI dropping 2 cents for the day.

Prices rose despite stronger A$ – AWI

Australian Wool Innovation said a stronger Australian dollar provided some headwinds for exporters; however, in USD terms, the Eastern Market Indicator rose by US 35 cents, and the Western Market Indicator rose US25 cents.

“The eastern selling centres outperformed Fremantle across most Merino fleece categories, reflecting stronger buyer competition across the larger eastern catalogues.

“Despite the firmer currency creating some pressure for exporters, underlying demand remained solid, as reflected in the stronger USD returns.”

AWI said performance across the selling centres varied through the Merino fleece categories. Finer Merino types in the eastern markets gained 30 to 35 cents, while Fremantle recorded a modest easing of 5 to 10 cents. Medium Merino fleece in Sydney and Melbourne rose 10 to 15 cents, while the west saw reductions of 10 to 15 cents.

Merino cardings led the gains, averaging 25 to 30 cents higher across all three centres. In contrast, crossbred types continued to ease, losing around 15 to 20cents.

AWI said there were premiums for high strength, well-styled fleece with low vegetable matter. There were also premiums for certified non-mulesed Merino wool.

AWI said the clearance rate eased to 92.8 percent, suggesting some seller resistance to current price levels, although the market continues to perform strongly despite the firmer currency and ongoing global trade uncertainty.

Money in wool – AWN

AWN Victorian manager Kelvin Shelley said new business from China is definitely the main driver of the market.

“Top sales have been quite good in China and end user retails sales have definitely picked up overseas,” he said.

Mr Shelley said Australia’s greasy stocks have been limited compared to normal levels.

He said Australia’s wool production is still down year-on-year, although the market has had some pressure in recent weeks with the 46,000 bale offering this week, and another 43,000 next week.

“So exporters are starting to see that as well, they’re probably starting to run a little bit short of finance.

“So we might see a softening over the next week.”

Next week, there is expected to be 42,953 bales on offer in Sydney, Melbourne and Fremantle, with all three centres returning to a Tuesday-Wednesday selling schedule.

Mr Shelley said it was good to see the wool industry going in the right direction despite the current global turmoil.

“It’s gone against the trend of everything else really around the world.

“There is money in wool at the moment, that’s the way I look at it at the moment,” he said.

“We just need people to continue to grow and we just need some seasons to go our way, after what we’ve had for the last couple of years.”

Sources – AWEX, AWI.