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Fine wool and non-mulesed premiums drive market up

Sheep Central, May 20, 2022

AUSTRALIA’S wool auction market has forged higher for a fourth consecutive week, led by higher prices for 18-18.5 micron fleece and premiums of up to 250c/kg for non-mulesed lines.

The Australian Wool Exchange said despite ongoing concerns about major difficulties with international shipping, global lockdowns and a higher Australian dollar, the Australian wool market has managed to continue to trend higher.

The most significant rises were in the 18-18.5 micron fleece range, AWEX said.

“Across the country the individual Micron Price Guides (MPGs) in this range rose between 2 and 59 cents.”

The Australian Eastern Market Indicator added 7 cents to close the week at 1434 cents/kg clean. Brokers passed in 10.3 percent of the 41,771-bale offering.

AWEX said selected specialty non-mulesed types continue to attract very strong competition and in this series recorded premiums of up to 250 cents when compared to wool of similar type and specification.

“As the finer microns continue to rise at a greater rate than the broads, the price differentials between microns are becoming larger.

“When we look at the difference in the south between 17 and 21 micron, the current difference in the MPGs is 1381 cents, compared to a difference of 1037 cents in the corresponding sale of the previous season, an increase of 344 cents,” AWEX said.

“This also means the difference in price for each point of a micron is also increasing.

“This is best highlighted in the 18 to 18.5 micron range in the south, the difference in price between the 18 MPG and the 18.5 MPG is 269 cents, meaning that each point of a micron is worth nearly 54 cents.”

AWEX said the oddment sector performed very strongly this series, driven predominantly by large increases in the price of locks. The three Merino Carding indicators (MC) rose by an average of 19 cents.

Although this time of year the national offering traditionally declines, the increase in prices continues to entice sellers with wool on hold to offer, AWEX said.

Demand demarcation at 19.5 micron – AWI

Australian Wool Innovation trade consultant Scott Carmody said despite the upward run of prices, the odd sign of weakness and uncertainty was prevalent at times with the wildly swinging foreign exchange (forex) rates confusing demand signals. The US$ vs A$ rate was particularly hard to follow, with a 2.5pc movement occurring in a very short period of time, he said.

“This brought about a cautionary approach to offering wool from the exporters.

“As such, the week’s buying lists featured the indent purchasers and direct to mill operators who were able to operate tightly to the ruling forex rates, rather than second guessing that would leave traders exposed to overnight currency risks.”

 

Mr Carmody said once again, the Western Market Indicator outperformed the EMI by appreciating by 13 cents or 0.9pc to a closing basis of 1502c/kg clean.

“The significant US$ EMI price lift suggested demand was still relatively robust as it shifted 1.6pc higher to US1009c/kg clean, in face of the strengthening A$.

“Despite the overall gains, more wool passed in this week than last as the national clearance rate drifted down to 89.7pc,” he said.

“Despite the overall price gains, there was a distinct demarcation line where demand was obviously stronger.

“In the Merino wools, the majority of sale lots finer than 19.5 micron came under more intense competition and eventually forged 15 to 40 cents higher,” he said.

“The Merino selection broader than 19.5 micron struggled to maintain their values and were largely quoted as unchanged to 5 cents cheaper for the week.

“Cardings and oddment types were well sought and gained 20ac, but the crossbred wool types ended the week 15 cents lower.”

Mr Carmody noted that all micron price guides being quoted out of the Western Australian market were above those of both the eastern selling centres.

“In the case of the Merino 18.5 to 19.5 micron types, the difference was substantial and upwards of 40 cents higher.

“Shipping issues may now be playing an increasingly larger part in pricing as overseas mills are willing to pay more to get delivery completed in a quicker manner,” he said.

Next week the national offering increases. There are currently 46,392 bales rostered in Sydney, Melbourne and Fremantle.

Click here to see the latest AWEX Micron price Guides.

Sources: AWEX, AWI.

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