AUSTRALIA’S wool auction market surged to its highest level since 2019 this week, as buyers chased Merino and crossbred volumes.

The Australian Wool Exchange said the market had a week of strong gains, driven by large increases in the Merino fleece sector.

Brokers catalogued 25,712 bales, 4132 fewer than last week, and passed in only 1.3 percent.

“On the opening day, buyer sentiment was aggressive and it was immediately apparent that large rises were on the cards, “ AWEX said.

“By the end of the day, the Merino fleece Micron Price Guides (MPGs) had added between 6 and 79 cents.

“The largest gains were in Fremantle, as the western centre did not enjoy the increases on offer on the second day of the previous series.”

AWEX said the rises were so large that the Fremantle MPGs all finished higher than the closing level of the Melbourne MPGs, setting the tone for a strong second day.

“The benchmark Eastern Market Indicator rose by 31 cents, the largest daily rise in the EMI since the 22nd of April.

“The EMI pushed up to 1911 cents/kg clean,” AWEX said.

“The rises were driven largely by demand, with currency only having a small influence.

“The EMI gained US32 cents for the day.”

On the second day, AWEX said just Sydney and Melbourne operated and the market continued to climb.

“The Merino fleece MPG movements ranged between unchanged and plus 51 cents.

“The EMI added another 23 cents.” AWEX said.

“The EMI closed the week 54 cents higher at 1934 cents.

“The EMI is now at its highest point since the 9th of May 2019, when it was sitting at 1952 cents.”

AWEX said the crossbred and oddment sectors also had another very strong week, with the rises in these sectors helping the EMI to the increases recorded.

“With many farmers across the country busy with their cropping programs, shearing is at a slow point.”

Australian Council of Wool Exporters and Processors president Josh Lamb said the auction price rises this week were mostly driven by medium term supply concerns as seasonal supply hits its low point.

“Larger Chinese mills are looking toward the new season and potential supply constraints.

“Traditionally at this time of the year mills are busy with production and less inclined to be adding to stock,” he said.

“It doesn’t look like volume is being prioritised over quality, some of the demand in the market now is for tender Merino fleece and pieces types over traditionally straight fleece.

“This might look like buyers are ignoring quality, but that’s certainly not the case,” Mr Lamb said.

Processors focused on securing volumes – AWI

Australian Wool Innovation said the Western Market Indicator closed 39 cents firmer at 2125 c/kg clean.

“Strength was also reflected in USD-denominated returns, with the EMI rising US49 cents to US1385 c/kg.

“Year-on-year, the EMI is now sitting 730 cents or 60.6pc higher in AUD terms, while USD returns are up US609 cents or 78.4pc.”

AWI said notably, the market absorbed both the price increases and the firm Australian dollar, indicating underlying demand within the auction system remained strong.

“This suggests processors and exporters are focused on securing volume.”

AWI said the smaller national offering, combined with expectations of further seasonal tightening in coming weeks, is likely adding urgency for buyers looking to secure sufficient inventory through the winter period.

“With shearing activity slowing, available auction volumes are expected to remain constrained in the short-term.”

AWI said notable this week was an increase in lower-style wool entering the market.

“However, the caution evident in recent weeks was largely absent, further suggesting buyers are currently prioritising volume and procurement over style differentials, even within a rising market.”

Next week sale will be held in Sydney and Melbourne, but not Fremantle, with the national offering expected to be just 23,288 bales.

Sources – AWEX, AWI.