China and India dominate in subdued wool market

Sheep Central, August 11, 2023

CHINA and India dominated buying in a subdued return to wool auctions after a three-week mid-year recess.

The Australian Wool Exchange said the market has resumed with a small overall loss in the benchmark Eastern Market indicator of three cents to 1176c/kg clean.

“As this was the first opportunity to sell at auction since early July, this is traditionally one of the larger sales of the season,” AWEX said.

“This year there was only 43,697 bales available to the trade, 11,666 less than the 55,363 on offer in Week 6 last year.”

AWEX said the market movements were varied across different sectors, types and microns.

“In the Merino fleece types, the individual Micron Price Guides (MPGs) ranged between plus 42 cents (17 micron in the North) through to minus 45 cents (19 micron in the West).

“The crossbred market was mainly positive,” AWEX said.

“The 37-cent (6.5 percent) increase in the Southern 26 micron MPG was a market highlight, with only the 32 micron 10 cent loss in the same region preventing an across the board crossbred increase.

“The carding market also recorded an overall gain, the three Merino Carding indicators (MC) rose by an average of 10.3 cents,” AWEX said.

“Although the fall in the EMI was minimal when viewed in Australian dollar (AUD) terms, due to a significant weakening in the AUD against the US dollar (USD) since the previous sale (the AUD lost 1.7 cents since the 12th of July), when viewed in USD terms the market reduction was larger, the EMI dropped by 22 US cents, a 2.8pc reduction,” AWEX said.

Sales will now continue every week until the end of year Christmas recess. Next week is another reasonably large offering as wool accumulated during the break makes its way to auction. There is expected to be 46,874 bales on offer in Sydney, Melbourne and Fremantle.

European enquiry sporadic – AWI

Australian Wool Innovation trade consultant Scott Carmody said exporters were able to conduct some new business over the break, but volumes were minimal and prices at around market only.

China and India were the most active with enquiry from Europe sporadic, he said.

“The majority of the recess saw the Australian dollar hover above the 67-cent mark against the US dollar that perhaps explained the thinly distributed new business opportunities.

“Just two days prior to sales re-opening, that forex rate had plunged almost 3pc to around the 0.65 mark,” he said.

“This led to widespread expectations from the trade of strong auction participation from the indent operators for mainly the Chinese first stage top-makers whom were able to take advantage of that far more advantageous rate.

“Those market results were fully met with the two largest Chinese top makers dominating the Merino fleece sector of the offering,” Mr Carmody said.

“Apart from the spirited bidding against each other, significant competition emanated from the export trading houses.

“These local entities seemingly concentrated on their clients buying orders and some forward contract completions.”

Mr Carmody said the crossbred buying was similarly destined for first stage manufacturers with good trader support, but the carding and Merino skirting sectors were the purchasing domain of traders.

“Whilst Individual type sectors within the merino fleece segment were down 15-20 cents, most other descriptions sold firm to slightly dearer.

“Of most interest from buyers were the crossbred fleece finer than 30 micron that gained 15 cents, lower (less than 4pc) VM Merino skirtings were fully firm to 10 cents dearer and cardings generally 5 to 10 cents dearer.”

Click here to see the latest AWEX Micron Price Guides.


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