Australian wool prices strain under largest offering since 2008

Sheep Central, March 6, 2020

AUSTRALIA’S wool market opened solidly this week, but lost ground under the weight of a 62,217-bale offering — the largest weekly figure since 2008.

The Australian wool market resumed this week, after the unprecedented ransomware cyber attack on the Talman software company forced the cancellation of sales last week — Week 35 on the sale calendar.

AWX senior market analyst Lionel Plunkett said buyers and sellers were pleased to be able to return to auction rooms, but due to the back log of wool that was unable to be sold in Week 35, the overall national quantity naturally increased significantly.

The market opened solidly, with wools selling at very similar levels to those achieved at the previous sale in late February, he said.

“As the sale progressed however, prices continually deteriorated, with the lesser style lots and those with poor additional measurement results recoding the largest falls.

“Across the country the individual Micron Price Guides (MPGs) fell by 5 to 84 cents for the week,” he said.

“The Western region recording the biggest falls.

“On the back of these losses the AWEX Eastern Market Indicator (EMI) lost 19 cents for the series, closing the week at 1562 cents/kg clean.”

Brokers passed in 23.7 percent of the offering, double the passed in rate of the last sale.

Two weeks’ worth of wool too much for the market – AWI

Australian Wool Innovation trade consultant Scott Carmody said almost two weeks’ worth of volume was just too much for the market to cope with in a single week.

“Growers selling were disadvantaged by prices falling across almost the entire selection.

“This was disappointing for the affected growers as many influential pundits were publicly expectant of a dearer market before the cancellation last week,” he said.

“The magnitude of the fall was tempered to a large degree by the massive passed in rate of 32pc on the final day of selling.”

Mr Carmody said in $US terms the indicator slid just 2 cents to US1034c/kg clean, as the 1pc appreciation of the Australian dollar against the US currency stymied the fall in that currency.

“Merino fleece reduced by 20-40 cents in the eastern centres, but significantly larger falls occurred in the west.

“Notably in the WA market, the growers resisted taking the lower prices on offer and passed-in 40pc of the Merino fleece on offer,” he said.

“Skirtings dropped 50 cents and cardings were 20 cents lower.”

He said crossbred wools managed to almost hold their values.

Mr Carmody said a relatively good offering of superfine Merino spinners and best top making types were perhaps the only unscathed sector, but even these were trending easier to buy on the final day.

“As far as wool type goes, this week could not have seen a more differing quality on display.

“Merino spinners wools yielding over 80pc dry were shown side by side with other wool from drought regions which barely hit 40pc dry,” he said.

“These drought-affected types were all 50 cents lower for the week.”

Mr Carmody said this week’s buying was dominated by the large Chinese indents competing strongly against Chinese top maker and locally-based trading exporters.

“Similar competition was witnessed on the crossbred segment.

“Traders were dominant in purchasing the available skirtings and processors dominated the carding purchase lists,” he said.

“Buying was heavier than normal for most operators at auction, but was spread across numerous companies, so finance stress may be avoided for most as volumes fall away the next few weeks and letters of credit flow in.”

Market put under pressure by software breakdown

Australian Council of Wool Exporters and Processors president Matt Hand said the Talman system breakdown, by delaying the movement of wool to auction, and the pressure of growers needing to sell wool despite the current market circumstances, put pressure on price levels.

“Having said that, if we had sold the week before, when the systems were down, it might have been a pretty flat market.

“There is a little negativity in the world economically and coronavirus hitting our biggest market (China) has got to have an impact,” he said.

“But the Aussie dollar weakness probably softened the blow somewhat and in Aussie dollar terms the market probably didn’t perform too badly really, when you consider everything at play.”

Next week, there are 46,680 bales scheduled for sale. Sydney and Fremantle cleared their respective backlogs caused by last week’s sale halt, but Melbourne will need the upcoming week to do so.

Click here to see the latest AWEX Micron Price Guides.

Sources – AWEX, AWI.


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