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Crossbred wool prices improve, but mixed Merino results

Sheep Central, March 5, 2021

Good crossbred wool prices improved this week. Photo – Arcadian Wool Brokers.

AUSTRALIA’S wool market generally held firm this week, with crossbred prices improving while Merino micron results were mixed, across the auctions in Melbourne, Sydney and Fremantle.

The Australian Wool Exchange said all three centres generally reported different movements across the individual Micron Price Guides (MPGs).

The national offering was 3594 bales lower at 46,544 bales, and brokers passed 9.3 percent.

“Compared to the previous season there has been 54,025 more bales offered through the auction system, this equates to a 5.2pc increase in volume.

“The market remained solid over the first two days, but noticeably diminished toward the end of the final day,” AWEX said.

“Melbourne (which sold over three days) was the only centre to record no negative movements for the series, with the southern MPGs ranging from par to 40 cents dearer.

“Sydney MPGs (which sold Tues/Wed) recorded movements of between -15 and +2 cents.”

AWEX said the Fremantle auctions on Wednesday and Thursday recorded the largest losses, with the Western MPGs for 18-19.5 micron dropping by between 13 and 27 cents.

“The up and down movements in different sectors and different centres, resulted in minimal movement in the AWEX Eastern Market Indicator, which gained 4 cents for the series and closed the week at 1310c/kg clean.

AWEX said in an opposite trend to the previous series, due to a weakening of the Australian dollar – it dropped by US1.79 cents compared to last week — the EMI lost ground and fell by US20 cents, closing the series at US1020 cents, a 1.9pc reduction.

AWEX said prices in the carding market increased across all three centres, the only sector to do so.

“General gains of between 10 to 20 cents in stains, locks and crutchings helped to push the three Merino Carding (MC) indicators up by an average of 10.3 cents.

Saved by the dollar – AWI

AWI trade consultant Scott Carmody said many participants speculated that the foreign exchange (forex) rates largely saved the local wool markets from falls as the Aussie dollar dipped sharply against the US dollar week-to-week.

“This produced the optimal scenario to sustain the current bullish price sentiment in the face of a not-so-ideal retail economy.

“A$ prices were fully firm to slightly dearer while the weaker currency gave our overseas customers and processors a cheaper buy-in price,” he said.

“In the instance of those using the US dollar or the Chinese Yuan (CNY), a price advantage of around 2pc was achieved.”

Exporters facing logistic finance issues

Mr Carmody said exporters facing financial restraints, predominantly due to the slowing of the logistics chain, this week bemoaned these circumstances as additional business is unable to be conducted.

“Knocking back new sales due to access to finance is not a new trading impediment, but it has to be contended with.

“Juggling finance is critical, and for those able to execute a good fiscal strategy can certainly reap some rewards,” he said.

“Many exporters are dealing with these restrictions and this is part of retarding the dominant bull market trend as competition moves in and out of auctions.

“Quite often the delays in sailings, and therefore payment, represent two weeks of exporters’ normal auction buying budget.”

Mr Carmody said Australia’s largest trading company – Techwool Trading — dominated this week’s buying, but some support from top makers and processors became apparent across all wool types and descriptions.

Next week’s national offering increases, there is currently 49,883 bales on offer.

Click here to read the latest AWEX Micron Price Guides.

Sources: AWEX, AWI.

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