Wool Market Reports

Superfine Merino wools lose out in auctions with currency movements

Sheep Central, April 12, 2024

SUPERFINE wool prices lost ground in an overall unchanged market indicator result at Australian auctions this week.

The Australian Wool Exchange said auction fluctuations were heavily influenced by currency movement across the three selling days.

Sales resumed after the one-week Easter recess, and understandably due to the break the national quantity rose.

AWEX said there were 50,184 bales available to the trade — 5711 more than the last auction series – and the original quantity was higher before 7 percent of the offering was withdrawn prior to sale.

“This was the largest since the opening sale of the calendar year.

“After the Australian dollar strengthened in US dollar terms since the close of the previous sale, buyers who trade using this currency had their purchase power reduced,” AWEX said.

“This was reflected in the market when it opened, resulting in general losses across the Merino fleece sector.

“The AWEX Eastern Market Indicator dropped by 6 cents for the day, but when viewed in USD terms the market was dearer, the EMI adding 5 US cents.”

AWEX said the second day’s currency movement was limited, with the EMI recording a 2 and 4 cent rise in AUD and USD respectively.

“On the third day only Melbourne was in operation, and an overnight fall in the AUD of over 1 US cent assisted in a dramatic turn around.

“Strong rises in Merino fleece types, helped push the EMI up by 4 cents,” AWEX said.

“In contrast to the opening day, when viewed in USD terms, the EMI dropped by 10 cents.

“The EMI closed the week unchanged at 1142 cents/kg clean, while finishing one US cent lower at 744 cents.”

AWEX said the finer microns have been more heavily affected by the falling market this season.

“This is best highlighted when viewing the 17 and 21 micron MPGs in the south.

“The 17 micron MPG opened the season at 1842 cents and the 21 micron at 1247 cents, a difference of 595 cents,” AWEX said.

“Currently, these two MPGs now sit at 1690 and 1306 cents respectively, a difference of just 384 cents.”

Brokers passed in 7.4pc of the bales that were finally offered.

Stronger US dollar hits market sentiments – AWI

Australian Wool Innovation trade consultant Scott Carmody said the opening sales following the one week recess were met with a substantially stronger USD (+1.5pc on the first two selling days) against the AUD.

“This saw the Australian wool auctions commence under a softer tone leading to losses across all types and descriptions,” he said.

“Under the cheaper market conditions on the opening day, Chinese top makers took full advantage of the hesitancy from traders and dominated the purchasing lists.

“The second selling day had prices firming up and starting to turn upward,” he said.

“This resulted in traders confidence lifting slightly, which transferred to better purchasing intent making for a solid market.

“That better atmosphere at local auctions then shifted to overseas buyers overnight Wednesday, which saw a much stronger market on the solo Melbourne sale on Thursday,” Mr Carmody said.

“All prices lifted with particular attention and competition placed onto the 18 to 21 micron Merino types.

“Gains of up to 20ac were commonplace by the close,” he said.

“Much of this came about due the sudden drop in the AUD value against the USD, which dropped the 1.5pc from the previous days.

“Traders dominated buying.”

Mr Carmody said Australian wool production continues to come under downward pressure evidenced by the latest key test data release from the AWTA. The substantial drop for March – down 22.4pc — led to the seasonal figures dropping towards 3pc less volume tested.

Next week the IWTO Congress will be held in Adelaide, but sales will continue, with more 46,000 bales up for sale on Tuesday and Wednesday.

Click here to see the latest AWEX Micron price Guides.

Sources – AWEX, AWI.


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