AWEX senior market analyst Lionel Plunkett said a reversal in sentiment this week took a toll on the market and resulted in a nine-cent dip in the AWEX-Eastern Market Indicator to 1092 cents.
Brokers passed in 13 percent of the 52,021 bales offered, with the Australian dollar sitting at US76.58 cents and the EMI in US cents down 21 cents to 836 cents.
Mr Plunkett said after a series of smaller weeks, the offering this week spiked to just over 52,000 bales with another large sale expected next week.
“At the current forecast of 59,144 bales, next week is shaping up to be the largest sale in four years,” he said.
Chinese buyers reacting to larger offerings
Techwool Trading export trade manager Josh Lamb said Chinese buyers would be looking at the big offering next week, that was supposed to hit the market two weeks ago.
“Unfortunately whenever you get significant increases in supply generally speaking, China use that as a bit of reason to temper their buying, spread it out a little bit and do a bit better.
“That was probably the main reason behind it.”
He said there was some talk of limited finance in the market, but this was not confirmed.
“That certainly could have contributed to it as well.”
China’s credit issues still affecting buying
Mr Lamb said China’s credit issues were also continuing to affect buying, with buyers preferring to buy smaller quantities weekly matching their financing, rather than larger volumes more sporadically.
“It hasn’t got any worse in the last three or four months, but it is still a major issue.”
The Chinese buyers could not afford to be “over-buying” and why the market had been so even.
The renewed interest from European buyers at the finer end of the clip was ongoing, he said.
“But they just lacked support from China this week, because primarily the European types are at the better end of the spectrum and they did creep down into the better end of the China spec the last probably three weeks.
“And what happened this week with China being a bit quieter that bottom end of fleece types were the ones that suffered the most,” he said.
Better European types held their ground
Mr Lamb said the better spec European wools weren’t that much affected this week.
“That reflect business, I mean Europe is definitely picking up and it has done over the last 18 months continually – they are definitely coming back into the market a lot more,” he said.
“The gaps are definitely open up in terms of microns but to me they are still not getting what they deserve and maybe that is going to be the problem medium to long term as well.”
He said when China is not in the market the bottom end of types were most-affected and that is the majority of the selection.
“So therefore the market looks poor.”
Launceston offering started strongly
Mr Plunkett said initially the trend of an advancing market continued when Launceston sale 33 was met with strong competition.
“Offered by separation in Melbourne as a one-day sale, prices for the better types (Spinners and best style/40Newtons/kilotex) made further increases on the new levels established during the previous week.
“Support for the few lower spec types was mixed, however, and gave an indication of the forthcoming market direction,” he said.
“Prices pulled back during the remainder of the week particularly on Thursday when there was a reasonably sharp downturn.
“Discounts narrowed towards the broader edge where limited numbers maintained some support, however the falls of 10 to 30 cents resulted in 24pc of fleece types being passed in on the day.”
Merino skirtings well-supported
Mr Plunkett said Merino skirtings have recently underperformed the fleece sector lately, however this week they were well-supported.
“Gains of 20 to 30 cents were recorded despite the losses made in the fleece catalogue this week.”
Crossbred wools getting continued interest
Crossbred wools were another area to receive continued interest, Mr Plunkett said.
“Thursday was more tentative but they mostly managed to finish five cents ahead for the sale.”
He said Merino cardings made further progress with their drive into record territory.
“Gains of 20 to 30 cents were made after a strong opening.”
Southern market opened strongly
Landmark wool risk manager Anthony Boatman said the southern market opened on Tuesday in Melbourne with a good selection of Tasmanian wool.
“Spinners style lots were well sought after, with prices lifting up to 20c, and best style with good strength also found strong support.
“The majority of the offering was within the 17 to 19 micron category range, and generally saw the southern indicators lift by 5-10 cents,” he said.
“Those gains were lost on Wednesday as the mainland lots saw decreased of 10-15 cents across the 18 micron and finer categories.
“There was little change across the medium wools however, with movements generally restricted to five cents either side of unchanged.”
Crossbreds also traded at similar levels to the previous week, with movement also restricted to plus or minus five cents, Mr Boatman said.
On Thursday, conditions deteriorated further as fine wools lost 20-25 cents. The few best style lots with good strength were only slightly down, however most of the offering was of lower quality.
“Medium micron wools also dropped away, with prices down 5-15 cents.
“Crossbreds were mixed, although generally positive, while oddments continued to lift.”
Sydney’s opening sales were negative
Mr Boatman said the Sydney sale opened on Wednesday with a negative tone throughout the market.
“Fine wools were generally 10-20 cents cheaper compared to the previous week’s superfine sale.
“Medium to broad merino fleece sold unchanged to slightly softer.”
Crossbred wools were generally firm to unchanged and oddments continued to push higher, with the Merino carding indicator quoted up almost 20 cents to 905 cents, he said. Locks were up 30 cents, while stains and crutchings gained 10 cents.
Mr Boatman said prices continued to fall as Thursday’s sale progressed. There were falls of 20-35 cents in the fine wools, with the 18 and 18.5 micron categories most affected.
“Medium microns were 10-20 cents lower by the close of trade, while crossbreds were able to maintain their levels with an unchanged result across most categories.
“Oddments lifted higher, with locks firm and crutchings and stains up 5-10 cents.”
Fremantle opened on a softer note
Mr Boatman said Fremantle’s market opened on a softer note on Wednesday, with the 18 micron categories most affected, easing 10 cents.
“The remainder of the market sold generally 5 cents under last week’s close, although the 18.5 and 21 micron wools were firm to unchanged.
“The market lost another 10-15 cents for the 18 micron wools and the 19 through to 20 micron categories,” he said.
“The 18.5 and 21 micron categories were quoted down almost 20 cents.
“Oddments were generally 5-10 cents dearer.”
Sources: AWEX, Landmark.