Discounting on wool with faults drives market lower

Sheep Central, November 3, 2023

STRONG buyer interest in clips with favourable additional measurements failed to halt a further slide in the Australian wool market this week.

The Australian Wool Exchange said after recording two positive movements and an unchanged result over the previous three selling series, the auction market fell this week.

“The national offering rose by 5354 bales to 44,378 bales, making this the largest national offering since the end of August.

“The total amount offered this season is tracking well above the previous,” AWEX said.

“Season to date there has been 625,655 bales offered, 24,103 bales more than at Week 18 last year, an increase of 4 percent.”

AWEX said there was very strong buyer interest on wool possessing favourable additional measurement (AM) results, and wool in this category recorded very little change.

“Lesser style wool, wool with less favourable AM results and wool containing any types of noticeable fault were discounted.

“It was the discounting of these types that drove the market lower.”

AWEX said by the end of the series the movements in the individual Micron Price Guides (MPGs) for Merino fleece across the country were between plus 7 and minus 32 cents.

“The skirtings, cardings and crossbreds recorded minimal movement for the series, meaning the overall market movement was driven by the Merino fleece.

“The AWEX Eastern Market Indicator (EMI) fell by 10 cents for the week, a reduction of 0.9pc.”

AWEX said the EMI continues to trade well below last year.

“Compared to the corresponding sale of the previous season, the EMI is 132 cents lower, a fall of 10.5pc.

“Due to a weakening Australian dollar — the AUD fell by 0.54 US cents since the close of last week — when viewed in US terms the fall in the market was higher,” AWEX said.

“The EMI fell by 12 US cents, closing the week at 715 US cents, a fall of 1.7pc.”

Price stabilization is occurring – AWI

Australian Wool Innovation trade consultant Scott Carmody said the most recent testing data from AWTA has 2.6pc more weight of wool tested thus far this season.

“All this perhaps indicates that a drawdown of the grower held stocks are being placed into Australian auctions.

“This is largely from stocks that had built up from the 2019/20 season.”

Mr Carmody said stagnation in pricing is occurring in a relatively narrow price range.

“This has created a steadying influence and surety of price through the entire wool supply chain.

“This price stabilization flows right through from the greasy wool price at auction through to the consumer,” he said.

“This is creating a solid base from which the entire industry can hopefully forge forward from when global economic conditions improve.”

Next week sales will be held on Wednesday and Thursday to accommodate a Public Holiday in Melbourne on Tuesday. 45,246 bales are currently expected to be offered in Melbourne, Fremantle and Sydney, which is a designated superfine sale.

Click here to see that latest AWEX Micron Price Guides.

Source – AWEX and AWI.


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