CHINESE top-making demand created a surge in Merino wool buying across Australia this week.
The Australian Wool Exchange said the market lift was mainly driven by a strong lift in most Merino fleece wool types among the offering of 37,725 bales, 3823 fewer than last week.
This reduced offering attracted strong competition from a large number of buyers and this increased buyer attention meant prices achieved were above last week.
“Although the lifts were generally felt across all good Merino fleece types, the finer microns in the eastern markets recorded the largest gains.
“This was reflected in the individual Micron Price Guides (MPGs) in Melbourne and Sydney for 18 micron and finer, which added between 23 and 62 cents,” AWEX said.
“The Merino MPGs across the country all recorded increases and the only exception was the 18 micron MPG in the west, which posted a nominal 1 cent reduction.
“These gains combined with increases in the skirting and oddment markets, and minimal movements in the crossbred sector, helped the AWEX Eastern Market Indicator (EMI) post a 17-cent rise for the series, closing at 1,341 cents.”
AWEX said the auction series defied an interesting trend that has developed over the previous few months.
“Since Week 6 (12th of August) the EMI has risen on even-numbered sale weeks only to fall on the odd-numbered weeks.
“This week is the first time since August that the market has recorded an overall increase for the series in an odd-number sale week.”
AWEX said the oddment market continued to perform strongly, and general gains in locks, stains and crutchings of between 10 and 20 cents pushed the three regional Merino Carding Indicators (MC) up by an average of 14 cents.
China’s largest top maker leads buying charge
Australian Wool Innovation trade consultant Scott Carmody said on the first day of selling there was a sale room atmosphere devoid of any confidence and prices depreciated, despite the falling value (-0.9 percent) of the Australian dollar against the US dollar.
“Overnight on Tuesday though, that tune changed to an overwhelming sense of conviction as many buyers attacked the auction from the first lot on Wednesday, the final day.
“This renewed vigour from buyers caused the market to surge initially by 15-20 cents, but then proceeded to get progressively dearer throughout the day and ultimately wool markets all closed at the highest point,” he said.
“By the end of the day some individual well-measured sale lots were achieving upwards of 70 cents better than the previous day.”
Mr Carmody said China’s largest top-making interest led the buying lists again and appeared to provide an assurance to others to spur them into action as well.
“Whilst new business was available from Tuesday onward, traders remained wary and it was mainly indents and manufacturers that concluded the majority of sales transactions and forced the improved pricing as a result.
“With the relatively large and unpredictable price swings on mainly the Merino fleece lots, it has been hard for exporters to extract consistent business and convert this to profitable contracts,’ he said.
“This accounts for the larger than normal direct and indent buying activity from overseas interests.”
Mr Carmody said the fickle nature of retail at the moment also causes further uncertainty from the manufacturing sector right through to retail, leading to the just-in-time delivery mentality.
Next week the national offering increases, 41,499 bales are currently expected to be offered in Melbourne, Fremantle and Sydney.
Click here to see the latest AWEX Micron Price Guides.