CHINA’S biggest top makers dominated bidding in wool auctions across Australia this week.
The Australian Wool Exchange said the market had an up and down series, with a soft start followed by a strong finish.
This combined to give an overall unchanged result in the benchmark AWEX Eastern Market Indicator at 1107c/kg clean.
“With only Sydney and Melbourne in operation this week the national offering fell to 27,519 bales.
“Season to date there has been 13,051 more bales offered compared to last; however, this figure is misleading,” AWEX said.
“Historically, there would be no sales held in Week 3 as the mid-year recess had begun, and the addition of these extra sales in July is bolstering early season offering figures.”
AWEX said buyer sentiment was again cautious from the start of the first day, and while market movements varied, the overall trend was lower. The EMI dropped 3 cents for the day.
“This was the ninth selling day in a row the EMI recorded a negative result.
“This was the longest downward run in the EMI since October 2020 (12 selling days),” AWEX said.
“The EMI dipped to 1104 cents, the lowest the EMI has been, also since October 2020.”
AWEX said the second selling day was in complete contrast to the first.
“Buyer sentiment was positive and the widespread competition helped to push prices higher.
“By days end, the individual Micron Price Guides (MPGs) had risen by between 2 and 46 cents.”
AWEX said the EMI ended its downward daily run, posting a 3-cent rise for the day, with weakness in the other sectors preventing a larger daily rise.
The passed-in bale rate was 8.3 percent, 5.2pc lower than the previous week.
AWEX said an overall clearance rate of over 90pc shows the willingness of most sellers to meet the current market.
Market opened weakly – AWI
Australian Wool Innovation trade consultant Scott Carmody said the leading indicators had minimal to zero price movement after this week’s Australian wool auctions, yet a rather erratic market situation had unfolded throughout selling.
“Auctions were conducted in just the two eastern centres as Fremantle lacked the necessary volume to hold a sale.
“The Australian dollar had strengthened against the US dollar since the close of selling the previous week which had the combined effect of dampening selling opportunities and reducing any available bid prices back to exporters,” he said.
“Markets opened weakly across all type sectors.
“Buyers initially lacked enthusiasm and were prepared to let the market drift,” Mr Carmody said.
“No immediate demand signals for new business was forthcoming and most forward seller buyers looked to try and extract every cent possible on any outstanding contracts.
“On the other hand, though, China’s largest two top makers dominated the Merino segment on opening day, taking advantage of not just the good selection of new season wools on offer and the more attractive pricing, but also of the weaker AUD which had fallen 40 points or 0.5pc overnight Monday,” he said.
“These two mills purchased a combined 39pc of the Sydney Merino fleece and 25pc of the Merino fleece sold in Melbourne on the first day.
“The second and final day of selling though was in complete contrast,” Mr Carmody said.
“Competition had suddenly ignited, particularly in Sydney. Merino fleece prices were all dearer.
“Almost all buyers were forcing the pace and looking to acquire some volume. Next week should determine the validity or not of these gains.”
Mr Carmody said for the past month, it has been very difficult for the trader buyer exporters to get into a buy/sell rhythm.
“The demand situation has been consistent, yet below “normal” activity from China, but rather frail from all other export destinations for Australian wool.
“Indian buying remains sporadic and largely reliant upon indent operations and the odd forward commitment,” he said.
“Continental European buyers are seemingly content with heading into their summer holiday season and perhaps look at any further inventory in the Australian Spring.
“One large positive seen in the market has been the buying from Europe’s two biggest top makers over the past couple of sale weeks,” Mr Carmody said.
“Whilst very type and volume restricted buying, with NM lots and lower vegetable matter wools being targeted, this purchasing has placed some sale room pressure against other buyers helping at least maintain price levels in those areas.”
Fremantle returns next week, for what will be the final selling series before the annual three-week mid-year recess. Currently, there are 33,564 bales on offer.
Click here to see the latest AWEX Micron Price Guides.
Sources – AWEX, AWI.
HAVE YOUR SAY