FALLS in Australian wool prices this week were attributed to Chinese concern over power restrictions in the processing sector, partially offset by European and Indian demand.
The Australian Wool Exchange said the wool market this week continued its volatile ride, with losses recorded in most categories except some fine fleece wools in Sydney and Melbourne.
“In the Merino fleece the bulk of the selection was 18 micron and coarser and there were general losses of between 10 and 30 cents for the series.
“This was reflected in the individual Micron Price Guides (MPGs), where the movements for the series ranged between 0 and -32 cents,” AWEX said.
“These losses, combined with falls in all other sectors of the market, resulted in a 16-cent drop in the AWEX Eastern Market Indicator (EMI), which closed the week at 1323 cents/kg clean.”
AWEX said it was worth noting that the market steadied on the final day, with minimal price movements ending with the EMI unchanged.
“The EMI has continually risen and fallen this season.
“Of the 12 selling weeks of the current season, the EMI has risen on five occasions and fallen on the other seven,” AWEX said.
“The result of these fluctuations has been 170 cents of negative movements, offset by 70 cents of gains.
“The overall result has been a 100-cent loss in the EMI since Week 1.”
AWEX said since Week 6, the movement in the EMI has been minimal and it has traded within 27 cents of the 1350-cent market during this time.
“The total amount for all wool sold this week was $57.07 million, pushing the total for the season up to $623.91 million.
“This is well above the amount achieved by the corresponding sale of the 2020/21 season, where the total amount was $397.12 million dollars, $226.79 million lower than what has currently been achieved,” AWEX said.
“The larger amount achieved is due to the larger offering and higher prices achieved this season when compared to last.”
Sluggish Chinese trading demand – AWI
Australian Wool innovation trade consultant Scott Carmody said sluggish Chinese trading demand gave little incentive for many local exporters to push to purchase and all markets drifted slowly downward.
“As the week progressed, competition dwindled to just a few of the higher volume buyers, with European and Indian activity helping the better types to keep their losses relatively low.
“Chinese top makers and Chinese indent buyers were the most active this week besides the usual two or three largest trading exporters,” he said.
“Most exporters reported difficulty in accepting any bids on offer so indent buyers appeared to receive the fresh orders.
“Without new Chinese forward contracts to act on, many sale room buyers found it hard to continue to support the market with any great confidence, and operating to European and Indian orders appeared to underpin the market somewhat,” Mr Carmody said.
“The current price gaps in the Merino market are significant at the moment.
“Whilst the leading price indicator is recovering nicely, the makeup of that indicator shows quite some disparity,” he said.
“Drawing a line through the 19.5 micron mark, the types finer than this are being well sought and for each point of a micron there is an average differential of around 40ac all the way down to 15 micron.
“For wools broader than 19.5 micron falls occur to around 10ac per point of a micron,” Mr Carmody said.
“In the crossbred wool section more emphasis is placed on other qualities, but a price gap for fibre diameter of 5 cents is apparent.”
Mr Carmody said despite the drifting prices on offer, grower sellers still disposed of 86.1pc of what was put up for sale.
“There was a variation between east and west selling centres of that clearance rate though, particularly on Merino fleece and skirtings sectors, which saw Sydney and Melbourne pass in 11.6pc, whilst the west had 17.1pc of those wools failing to meet reserves.
“This is most likely due to the micron average of the east being sub-19 micron, whilst the west was around a 19.5 micron average, with broader Merino types less sought at the moment compared to their finer counterparts.”
Next week’s national offering continues to stay around current levels, with 38,025 bales currently expected to be offered in Sydney, Melbourne and Fremantle.
Sources: AWEX, AWI.