FINE wool prices lifted this week, but medium and broad Merino, and crossbred values fell in most auction centres.
The Australian Wool Exchange said the market recorded a small overall increase for the second consecutive week.
“In a very similar result to the previous series, the overall lift in the market was largely due to the finer Merino fleece types.
“The strongest buyer sentiment was concentrated in wools 18 micron and finer,” AWEX said.
“This increased sentiment resulted in strong price rises in this range, which was reflected in the individual Micron Price Guides (MPGs) for 18 micron, which added between 22 and 79 cents across the country for the series.
“The buyer enthusiasm for the finer types was not as evident in the medium to broad microns, pushing prices down for 20 micron and broader down,” AWEX said.
The MPGs for 20 micron and coarser fell by between 6 and 38 cents and the losses in these types, combined with losses in the crossbred market, prevented the AWEX Eastern Market Indicator (EMI) from recording a more substantial increase.
The EMI closed the week at 1320 cents/kg clean, a rise of 5 cents, with brokers passing in 11.7 percent of the 43,950-bale offering.
“The minimal overall movement in the market has been welcomed, with many in the industry preferring a steady market, rather than the large unpredictable fluctuations sometimes witnessed over the previous 12 months,” AWEX said.
“This steadiness in the market has been reflected in the movements of the EMI over the previous four weeks.
“Over this time, the EMI has traded within 9 cents of the 1315-cent mark.”
AWEX said the crossbred sector followed the same pattern as the broader Merinos, recording overall losses for the fourth series in a row. The MPGs for 26 to 30 micron posted losses of between 1 and 15 cents.
AWEX said the only crossbred MPG to manage an increase was 32 micron, which rose by the smallest of margins (+1 cent).
Bigger Merino offerings stifle medium and broad micron demand
Australian Wool Innovation trade consultant Scott Carmody said it was a strange week with some diametrically-opposed demand areas, resulting in some very cautious approaches to purchasing Merino wool on one side and aggressive strategies on the other.
“This demand was split squarely by micron through the 19 micron mark.
“Crossbreds also struggled to maintain levels,” he said.
Mr Carmody said raw supply versus demand economics came to bear this week as growing offerings of the broader micron (19.5 to 23 micron) stifled that area and sent prices backwards (-15 to -30ac).
“A lot of this wool is also carrying vegetable matter (vm) levels above the favoured 1 percent average that the standard China contract allows.
“Conversely, the shrinking supply of wools finer than 19 micron saw progressively stronger competition as the qualities went finer,” he said.
“Gains of 20 to 80 cents were made, with 17.5 micron the preferred type at +80 for the week.”
Mr Carmody said a strong lead on the short-term outcome for wool price is the strengthening interest from manufacturers outside of China.
“The Czech republic are exercising some of their considerable purchasing ability, while the Indian buyers are increasingly interested, albeit in the face of a very difficult labour situation due to pandemic disruptions in their country.
“When the wools suit, the Italians are also appearing to be upping their volumes,” he said.
“China remains the dominant force though, but this added competition leads to a healthier and more confident but less predictable trading environment.”
Next week’s national offering decreases slightly. There is currently just over 41,000 bales on offer in Sydney, Melbourne and Fremantle, with all three centres operating over two days.
Click here to review the latest AWEX Micron Price Guides.
Sources – AWEX, AWI.