A fall in the Australian-US dollar exchange rate boosted wool prices in Melbourne and Sydney this week, but the gap between good style, sound, low mid-break wool and low spec, longer and tender types is getting wider.
AWEX senior market analyst Lionel Plunkett said the late rally last week had given a positive signal heading into this week and triggered increases of 5-10 cents on the opening sale day, Wednesday.
The bale offering this week also dipped to 41,548 bales this week, with two-day auctions in Sydney and Melbourne and a one-day sale in Fremantle.
AWEX EMI up 13 cents to 1042 c/kg
The AWEX Eastern Market Indicator finished on Thursday at 1042c/kg, up 13 cents, with the Australian dollar on US85.75 cents and the EMI in US cents at 894, down eight cents. The national pass-in rate was 7.3 percent.
“The finer range found the most interest, especially the more stylish types of which there was a plentiful selection, including a Tasmanian catalogue offered in Melbourne,” Mr Plunkett said.
“Buyers awoke on Thursday morning to a fall in the Australian dollar of almost two cents; prompted by falling metals prices and the results of the USA mid-term elections, which underpinned support for the US dollar.
“The consequence was a jump in wool prices in Australian dollar terms,” he said.
“The medium and broader ranges found the most support, ending as much as 20 cents higher at the close after initially opening the sale only a few cents higher.
“In the finer microns the focus was on the better types, which managed to extend the gains from the previous day while the lower-spec types remained mostly unchanged.”
Mr Plunkett said despite the gains in the fleece catalogue, Merino skirtings recorded a flat result, closing in line with the previous sale.
“The second largest crossbred offering for the season attracted good competition, finishing 10 cents higher after a strong result on the final day.
“The largest oddment catalogue in 10 months was absorbed by buyers relatively easily, with the Merino carding Indicators all managing to edge a few cents higher,” he said.
The highlight of the week was two lots certified as 1PP, one each in Melbourne and Sydney.
Gap between better and lower spec wools to continue
Techwool Trading managing director Rod Franklin said the market reacted principally to the Australian dollar dipping this week, with some influence of buyers covering November shipments, but the gap between good and lower spec wools was getting wider.
He said really good spec European wool is going one way – getting a little dearer – while prices for longer wool, with higher mid-break and lower tensile strength were languishing, he said.
The gap was as wide as Mr Franklin had seen it and he expected the situation to continue for possibly three months into autumn next year.
“It’s related to co-efficient of variation, but the gap between a really good European type 18 micron compared to a very poor spec, long, tender, high mid-break wool is well in excess of 200c/kg clean.
“I’m pretty sure that is as wide a gap as I have ever seen.”
Mr Franklin said the highest passed-in rates were for the lower spec wools.
“You can sell odd lots of it at a cheap price, but there is certainly too much there at the moment.
“So I think we will see this situation probably well into the autumn when we do get a larger percentage of better-spec, lower mid-break shorter wool, which will allow us to use a few of these poorer spec ones,” he said.
“I would guess about another three months like this.”
Sydney prices helped by quality fine wool offering
Landmark wool risk manager Anthony Boatman said wool prices continued higher this week with the quality selection of Australian superfine wool offered in Sydney assisting prices. The AWEX EMI was quoted 4 cents higher on Wednesday, then another 9 cents higher on Thursday.
“Fine wools opened well in Sydney on Wednesday, with prices lifting 5-15 cents on the back of a good selection in the designated Australian superfine sale.
“Focus remained on the low mid‐break lots with good strength.”
Mr Boatman said medium micron wools registered very little change from previous levels, although the market was tending firmer.
Crossbred wool also closed mostly in positive territory on Wednesday, gaining up to 5 cents, he said.
“Prices continued higher on Thursday, with fine wools mostly holding their values and lifting up to 5 cents higher.
“Medium wools were well-supported, with increases of 10-15 cents common among the 19-22 micron categories, while 21 micron wools were the standout with an 18 cent increase.
“Lower spec lots closed the gap, also recording good gains.”
Mr Boatman said crossbreds continued to be well sought-after, with gains of 5-10 cents. Oddments lifted up to 10 cents.
Stylish Launceston offering pushes Melbourne prices up
Prices opened a bit shaky on Wednesday in Melbourne, but improved throughout the day, Mr Boatman said.
“The stylish selection of Launceston-sourced wool helped push the fine wools higher, along with the continued support of the low mid‐break lots which pushed most indicators up 5-10 cents higher.
“Medium micron categories also fared well with most categories up to around 5 cents higher.”
He said crossbred fleece prices were mixed, ranging from a few cents higher to around 5 cents lower, while oddments were little changed.
“Fine wools continued another 5 cents higher on Thursday, while the largest gains were recorded among the medium to broad wools.
“The 19.5-22 micron categories were quoted around 20 cents higher on Thursday, while the 23, 18.5 to 19 micron wools were close behind with gains of around 15 cents,” Mr Boatman said.
Crossbreds were around 10 cents higher and the oddment lots lifted about 5 cents.
Solid general support in Fremantle
Mr Boatman said there was solid support for all categories in the single day sale in Fremantle on Wednesday.
Prices for the better style, low mid‐break offering of 18 micron wool lifted close to 15 cents.
“The 18.5 to 19 micron categories on offer were quoted around 5 cents higher, while the 19.5-22 micron categories made good price improvements in the order of 10 cents.
“Oddments also made encouraging gains, with locks and crutchings up 5-10 cents.”
Sources: AWEX, Techwool Trading.