MERINO wool prices have declined for the third consecutive week, despite a smaller offering, prompting an increase in the number of clips passed in.

A small rise in crossbred fleece prices was the only positive aspect of auctions in Melbourne and Sydney this week.

The Australian Wool Exchange said with the Western region not holding a sale during this week, the national offering reduced to 38,774 bales, 7593 bales fewer than the previous week.

The total amount offered for the season is now trending lower than the previous season, with 27,624 fewer bales offered or an 11.4 percent reduction, AWEX said.

“The overall drop in the market was driven by falls in Merino fleece prices.

“As the market opened, the prices on offer for these types were noticeably lower than the previous week and what then followed was a steady decrease as the sale progressed,” AWEX said.

“By the end of the first day, the individual Micron Price Guides (MPGs) for Merino fleece had dropped by between 14 and 75 cents.

“The AWEX Eastern Market Indicator fell by 24 cents for the day, with relatively small movements in the other sectors preventing a larger fall,” AWEX said.

“The second day the falls continued, but to a lesser extent, although the pattern was similar, with a soft opening, followed by a slow, but continual decline.

“The Merino fleece MPGs lost between 11 and 35 cents for the day, while the EMI dropped another 12 cents, again the movement softened by small movements in the skirtings, crossbreds and oddments.”

AWEX said the EMI closed the week 36 cents lower at 1127 cents/kg clean.

“The EMI is now at its lowest point since June and 215 cents below the same time last year, a reduction of 16pc.”

AWEX said one positive aspect of the week was the broader crossbred types, that defied the overall trend to post gains of between 7 and 13 cents.

Reduced offering gave no price stimulus –  AWI

Australian Wool Innovation trade consultant Scott Carmody said the lack of the Fremantle (WA) market operating failed to provide a positive price stimulus to the two eastern centres left operating.

“Any thought of the reduced quantity on offer affecting prices positively, was clearly and rapidly dismissed.

“The forward estimates for the next few weeks had quantities scheduled well above where they were last year at the same time,” he said.

“This is despite the offered and sold quantities at auction being 11.6pc and 6pc lower respectively compared to last year at the same time.”

Mr Carmody said the noticeable change of seller behaviour for this season is the willingness of growers and their seller representatives to take the prices being offered.

“Last year at the end of the same auction week six weeks into the new season had seen just 85pc of the offered volume traded, whereas this year, 90.3pc of wool offered had exchanged hands through to the buyer.”

Mr Carmody said Chinese top makers and indents for first stage manufacturers dominated the buyers lists again, with a step down strategy able to be employed as competition remains wary.

“This involves set volumes targeted to being bought, then when met, stepping down to a lower level to secure further inventory.

“Traders are unable to be confident enough to participate at any great strength,” he said.

“The new forward and prompt business is just not there in volume at present to operate to their usual levels of purchasing engagement at auction.”

Mr Carmody said signs emerged this week of the Australian dollar (AUD) against the US dollar resisting further erosion of value for the time being.

“The weaker forex trend has helped arrest the extent of AUD falls for the past few weeks, and in somewhat of a positive, this week’s market was similarly weaker, but without forex supporting AUD prices.”

Fremantle resumes selling next week, all three centres will now be in weekly operation until the Christmas recess.

With the return of the WA auction, the national offering has been bolstered and currently there are expected to be 48,653 bales on offer.

Click here for the latest AWEX Micron Price Guides.

Sources – AWEX, AWI.