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Chinese buyers chase fine Merino fleece at auctions

Terry Sim, January 15, 2021

Fine Merino wool was in demand this week. Image – AWEX.

FINE Merino wool prices led a general improvement in Australian auction prices in the first auction sales after the Christmas break this week.

AWEX senior market analyst Lionel Plunkett said after the annual three-week Christmas recess, quantities increased as wool received over the break made its way to market.

“There was 52,940 bales offered nationally, this was the largest sale since March last year.”

Mr Plunkett said the easing of some COVID-19 restrictions allowed Melbourne to conduct a three-day sale, and to avoid Melbourne selling in isolation after a recess, Sydney sold on Tuesday and Wednesday, while Fremantle offered wool on Wednesday and Thursday.

“The large offering attracted strong demand, pushing prices higher across most Merino fleece types.

“The finer microns recorded the largest gains, and the individual Micron Price Guides (MPGs) for 18.5 micron and finer rose by 11 to 61 cents for the series,” Mr Plunkett said.

“The broader microns remained solid, recording very little change.”

He said the gains in the finer MPGs helped to push the AWEX Eastern Market Indicator (EMI) up by 15 cents for the week. The EMI finished at 1172c/kg clean, an increase for the series of 1.3 percent, and brokers passed in 10.9 percent of the offering.

“Due to the continual strengthening of the Australian dollar since the previous sale — in the final sale of last year the Australian dollar was nearly 2 cents lower at US75.52 cents — when viewed in US dollar terms the rise in the EMI was more significant,” Mr Plunkett said.

“The EMI added US33 cents for the series to close at 907 US cents, and this equated to a 3.8pc increase.”

Mr Plunkett said more than 24pc of the overall offering was crossbred wool and this sector also received strong support, with the large offering selling at very similar levels to those achieved at the previous sale.

“The oddment sector was the strongest performer (in percentage terms) for the sale, and the three Merino Carding indicators (MC) added an average of 38 cents, an average increase of 4.7pc.

Pre-sale fears not realised – AWI

Australian Wool Innovation trade consultant Scott Carmody said fears of the large volumes and a significantly stronger Australian dollar against all major currencies placing negative influence upon the market did not materialize or dampen buyer enthusiasm.

“The pre-sale banter was strangely wide of the mark, as most buying pundits were expecting flat to cheaper wool prices.

“Several economic factors including the previously mentioned unfavourable foreign exchange rates and large volumes scheduled for all of January pointed to such conclusions being made,” he said.

“Exporters did report new business was done, but not enough volume had been written or at price levels that would warrant the subsequent price results that eventuated.

“Of most interest to the trade this week were super fine Merino types finer than 18 micron,” he said.

“The vastly improved seasonal conditions across most of Australia and breeding decisions over recent years has led to less availability of those types.

“On the Chinese processors’ side, the current lack of the usual strong buying from Europe and the sub-continent on this sector has opened up big export opportunities for them in tops and yarn supply.”

“Traders dominated the buyers’ lists this week, but were ably supported by the Chinese top makers,” Mr Carmody said.

“This activity forced price gains of 50c/kg clean on 18 micron and finer Merino and largely firm unchanged levels on 18.5 to 22 micron.”

Mr Plunkett said next week’s offering remains fairly large, as accumulated wool continues to be offered. There are currently 49,140 bales available to the trade for next week, with all three centres in operation.

Click here for the latest AWEX Micron Price Guides.

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Comments

  1. Steve Harrison, January 15, 2021

    Hi Terry, I have had a number of inquiries regarding the results of the non-mulesed wool sale that took place before Christmas from both sides of the fence. If it was or was not a success? I think the results and a market report from Josh Lamb, AWEX and a follow up by Sheep Central is in order.

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