Fine wool supply concerns push price indicator to 1422c/kg

Sheep Central January 16, 2017

wool-bales-selling-oct-2016CONCERNS over future fine wool supplies have pushed the Australian wool market to its highest level since 2011.

Wool finer than 19.5 micron rose from 92-162 cents a kilogram last week, pushing the AWEX Eastern Market Indicator up 67 cents to 1422c/kg clean, its highest level in 5.5 years and only 3 cents short of the all-time high in 2011.

The demand surge came despite a large national offering of 51,379 bales and the EMI in US$ lifting 56 cents to 1061 cents. The offering contained a smaller percentage of Merino types than previous sales, although consistent with annual seasonal sale trends.

AWEX senior market analyst Lionel Plunkett said there were sharp rises over the three days as the market continued with the rally noted in December.

He said sentiment on the first sale day of the new calendar year was extremely positive from the outset when Melbourne sold in isolation on Tuesday. Sydney and Fremantle joined the selling roster on Wednesday and the rises continued.

“Thursday was more subdued but still managed increases of 20 to 30 cents.

“Net results for the week were widespread increases of 70 to 150 cents,” Mr Plunkett said.

“The finer microns enjoyed the most support and extended their premiums over the broader microns which had less extreme rises.

“Buyers scrambled for quantity for most of the week, pushing lower spec types along with the better types.”

Mr Plunkett said only on the final day did buyers become more selective and some of the lesser types slowed in their momentum.

Merino skirtings followed fleece types higher, rallying 50 to 100 cents with the superfine types most affected, he said.

“In line with pre-Christmas trends, the crossbred market was again fairly lacklustre compared to the Merino catalogue.

“The finer microns were reasonably steady but 30-microns and coarser fell as much as 30 cents.”

Although the rises were more sedate than the fleece sector, the oddment market performed very strongly this (last) week and Merino carding indicators in all three centres rose on every selling day, Mr Plunkett said. The lift of 30 to 40 cents pushed all three carding indicators to record levels.

Chinese, European and Indian buyers active

Australian Wool Innovation’s weekly market report said the rise in the EMI in US dollar terms showed true demand and concerns over supply are driving the current bull market for wool rather than currency fluctuations.

“Perhaps the biggest development for the week was seen on Thursday with many expecting the one cent gain in the Australian dollar over night to push the market in reverse; however, the market defied the sentiment and continued its rise.”

AWI said all buying segments were active, with indent, forward sellers, processors and even some speculators working hard to secure wool.

“Chinese, European and Indian interests were all active in the market.

“Even though 51,300 bales were up for sale, this week’s offering included one of the smallest percentages of Merino wool for the selling season and there is concern over the amount of finer wool coming onto the market in the future.”

AWI said the good season experienced across Australia is becoming evident at sales, with higher vegetable matter content wool being offered; however, this is so far not deterring buyers. Some processors are looking at the higher VM wools as an opportunity to secure good clean wools at a lower price by choosing to reprocess these types.

Sources: AWEX, AWI.


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