European orders lift wool auction competition

Sheep Central, September 18, 2023

FORWARD orders and inventory replenishment among overseas buyers pushed Australian wool prices higher last week.

The Australian Wool Exchange said the market recorded a solid increase in the auction series, with all sectors recording either increased or unchanged levels when compared to the previous selling series.

The national offering dipped slightly to 41,419 bales and continued to track below that of the previous season, AWEX said.

“There have been 342,600 bales offered to date in the 2023/24 season; this is 9561 bales or 2.7 percent less than the previous season.”

AWEX said the strong finish to the previous week’s selling in Western Australia — where large increases were recorded across all Merino fleece types — transferred into this week’s opening, where these increases were quickly realised.

“By the close of the first day, the individual Merino fleece Micron Price Guides (MPGs) across the country had risen by between 3 and 31 cents, the 17-micron MPG in the North the only MPG to resist the upward trend.

“With all other sectors either maintaining or increasing levels, the AWEX Eastern Market Indicator (EMI) posted a 15-cent rise; the largest daily rise since July,” AWEX said.

“The second selling day prices consolidated, opening at very similar levels to the previous day, then slowly strengthening as the day progressed.

“By the end of the second day the movements in Merino fleece MPGs ranged between 0 (unchanged) and plus 14 cents, no MPGs recorded falls for the day,” AWEX said.

“The EMI added 21 cents for the week, the largest weekly rise in the EMI since Week 1 (5th of July), when the EMI opened the season with a 36-cent increase.

“After falling to its lowest point (1,118 cents) since October 2020 in the previous series, the EMI has now risen for three consecutive selling days, adding 30 cents across these sales, a 2.7pc increase.”

Renewed European and sub-continent orders feature – AWI

Australian Wool Innovation trade consultant Scott Carmody said all wool types and descriptions on offer sold dearer at the Australian wool auctions.

“Renewed orders from both European and sub-continent users, although relatively small in volume,  pushed enough extra competition into sale rooms to see the Chinese suppliers having to increase buy in levels to try and purchase their usual weekly requirements,” he said.

“Grower sellers were keen to take the better prices on offer as witnessed by the 95.5pc sold figure.

“This is one of the highest weekly clearance rates for some time,” he said.

“This adds weight to the current trend by sellers to accept buyers’ bids.

“For the season a very high 90.5pc of all wool offered has been sold,” Mr Carmody said.

“This suggests current wool values are very attractive compared to other on farm production enterprises at present.”

Mr Carmody said in a week that was relatively unaffected by forex rates, it was all prompt demand and exporters forward order books and inventory replenishment that saw prices appreciate.

“The magnitude of the gains was reasonably absorbed, with around 25 cents clean or a general 1.6pc added to raw wool values, but the steady and measured velocity of the gains tend to indicate it was more about buying to set prices rather than reacting to a surging demand scenario.

“Local trading houses dominated the purchasing action with solid support coming from strong Chinese indents in both the Merino and crossbred wool type sectors,” he said.

“Significantly, the usually dominant direct buying from the three largest Chinese top makers was extremely subdued and limited in volume.

“Compared to the same point of last season, there has been an additional 3.4pc or over 10,000 bales more wool sold through auction,” Mr Carmody said.

“On the Merino wool sector, the buying pressure centred around types broader than 18 micron, with super fine (less than 18 micron) struggling somewhat to find the stimulus required to create the usual premiums and price gaps to the broader wools.

“All crossbred wools attracted keener interest and in percentage terms, are in the midst of somewhat of a mini recovery,” he said.

“28 micron (wool) is 13.5pc dearer and 30 micron 21pc dearer than the season starting price basis.”

Next week’s offering is of a similar size, 42,887 bales are currently expected to be offered in Sydney, Melbourne and Fremantle. The auction sales for Week 13 and Week 14 are scheduled to change to a Wednesday and Thursday selling roster.

Click here to read the latest AWEX Micron Price Guides.

Sources – AWEX, AWI.


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