Wool Market Reports

Currency driven wool price trend falters at auctions

Sheep Central January 24, 2025

AUSTRALIA’S wool auction market has weathered an increase in the weekly bale offering, but failed to maintain the upward price trend of last week.

The Australian Wool Exchange said the higher prices on offer last week encouraged more sellers to the market, bolstering the national offering.

“There were originally 50,965 bales available to the trade but after 2.5 percent was withdrawn prior to sale, the final offered figure was 49,692 bales,” AWEX said.

“This was the largest national offering of the current season — by over 7000 bales — and the largest since Week 41 last season (11 April 11th year), when there were 50,148 bales offered.

“Of the nearly 50,000 bales (49,692), 46,004 bales were sold, with 7.4pc of the offering failing to reach seller reserve,” AWEX said.

“The movements in the individual Micron Price Guides (MPGs) for Merino fleece across the country ranged between plus 7 and minus 34 cents, with the largest falls felt on the opening day.

“The benchmark AWEX Eastern Market Indicator (EMI) dropped 4 cents on the first day,” AWEX said.

On the second day the market settled resulting in a generally unchanged market, AWEX said.

“This was reflected in the EMI which was finished the day unchanged.

“The EMI ended the week 4 cents lower, closing at 1186 cents/kg clean.”

AWEX said in what is an all-too-common occurrence, the market movements were again heavily influenced by currency.

“A strengthening of the Australian dollar compared to the US dollar since the close of the last selling series — the AUD gained 0.75 cents compared to the USD — meant that when viewed in USD terms the market conditions were more positive.

“The EMI gained US6 cents for the series, closing the week at US743 cents.”

Market stood up relatively well – AWI

Australian Wool Innovation trade consultant Scott Carmody said following the strong price surge at the opening week of the auctions, larger than expected volumes were put up for sale this week.

“Despite some slightly lower returns felt when measured in Australian dollar (AUD) terms, the market stood up relatively well against that short-term supply increase.

“In US dollar (USD) terms, general values were upwards of 1pc dearer with the difference in forex accounting for that entire gain plus some,” he said.

Mr Carmody said at the start of the week, exporters reported selling for new orders was available, but sporadic.

“Prices being offered were “around to under market” for those willing to book forward.

“As the week progressed on Monday through to Tuesday evening, volumes to sell became more readily available, but the strengthening AUD against the USD somewhat halted that enthusiasm on both sides of the trade for taking too much on board without risk coverage or supply surety,” Mr Carmody said.

“By Wednesday enquiry had seemingly reverted to intermittent once more as the AUD edged towards 0.63 against the USD.”

Mr Carmody said while all Merino prices were traded under a much more subdued environment this week, the underlying tone of buying remained quite buoyant despite the lowering of prices by  generally 15 cents for the week.

“The better specification sale lots were less affected as the current offerings are being hampered somewhat by a larger percentage of harder to place wools having lower strength (N/kt) and higher position of break in the middle (PobM) readings.

“This results in calculated coefficient of variation hauteur (CVH) readings well into the 55-60pc range,” he said.

“Most standard China contracts orders require a batch average of 49pc. Crossbred wool types and cardings unchanged.”

Mr Carmody said buying was dominated by the two largest trading exporters and the two large Chinese top makers.

“These top four took over half the overall volume on offer.

“One of the Chinese top makers buying was much stronger, possibly due to their not attending next week’s auctions due to Chinese New Year staffing.”

Mr Carmody said the coming selling week coincides with the Chinese spring festival (New Year) holiday.

“Most of the Chinese factories, manufacturers and traders will  allow staff three days to a full week or more off work.”

South Africa will suspend their wool auctions for the week.

Next week’s national offering is forecast to reduce significantly, there is currently 34,565 bales expected to be offered in Sydney, Melbourne and Fremantle. Sales will be held in the unusual selling pattern of Tuesday and Thursday, with no sales on Wednesday to allow for the China celebrations.

Sources – AWEX, AWI.

 

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