WEAKNESS in the Merino fleece market – especially the 18-19.5 micron range – has contributed to a small overall loss across Australian auction this week.

The Australian Wool Exchange said with no Fremantle this week, only 22,806 bales — 3472 fewer – were offered in Sydney and Melbourne.

“This was the smallest national offering since September 2020, this was during the COVID-19 pandemic,” AWEX said.

“On the opening day buyer sentiment was best described as cautious, although the smaller offering was well supported and the market opened solidly.

“The prices being achieved were generally within 10 cents of those on offer at the close of the previous series,” AWEX said.

“By the end of the day, the movements in the individual AWEX Micron Price Guides (MPGs) for Merino fleece ranged between positive 18 cents and negative 8 cents.

“A strong crossbred market, helped to push the benchmark Eastern Market Indicator (EMI) up by 2 cents for the day.”

“On the second day, buyer sentiment had weakened, this weakening was quickly felt in the sale room and prices began to fall,” AWEX said.

“By the end of the second day, the MPG movements ranged between unchanged and negative 31 cents.

“The crossbred sector held up well compared to the Merinos, recording a generally unchanged market, this helped to soften the downward impact on the EMI, which fell by 7 cents for the day.

AWEX said the EMI finished the series at 1199 cents/kg clean, down 5 cents on the previous close.

“A marginal increase – US0.16 cents – in the Australian dollar compared to the USD, meant that in USD terms the EMI movement was slightly more positive, dropping just one cent to close at US775 cents.”

Demand enough to hold the market – AWI

Australian Wool Innovation trade consultant Scott Carmody said despite the generally unchanged to slightly softer prices, the wool grower sellers were largely committed to off load their product, with clearance rates above 90pc. Brokers’ passed in 9.9pc of the bale offering.

“Most notable though was that the demand indicating US dollar equivalent price levels remaining firm.

“The strengthened AUD against both the USD and Chinese yuan was offset by the ever so slightly lower AUD values at auction,” he said.

“This validated some of the exporters’ pre-sale thoughts that demand was just enough to hold the market, despite the sharp bids being placed in front of them by the overseas users requiring inventory.

“Purchase lists were hampered by the low volumes on offer,” Mr Carmody said.

“Neither the local exporters nor first stage processors were pushing too hard to buy weights in the very low supply offerings, which could have sent prices up into territory not representative of the current global values of trade.”

Mr Carmody said not only are total wool volumes down, but the selection is quite variable, making it increasingly more difficult to put together container loads of individual types.

“This is mostly affecting the better types end of the supply.

“Drought conditions are still affecting many wool growing regions and whilst some minor rain has fallen, some hopeful forecasts are on the horizon,” he said.

There is a public holiday in NSW and Victoria (not WA) but all centres will sell on a Wed/Thurs rotation.

Fremantle returns to the selling program next week, bolstering the offering. There is currently expected to be 30,187 bales on offer nationally.

Sources – AWEX, AWI.