Growers bail as Aussie dollar lifts and wool prices slip

Sheep Central, May 12, 2023

MORE brokers passed in wool at Australian auctions this week as currency movements impacted a market that struggled with an increased volume of wool.

The Australian Wool Exchange reported that 24.8 percent of the 43,454 bales (4616 more) offered this week were passed in.

AWEX said the Australian dollar rose by 0.89 cents against the US dollar since the close of the previous series.

“As the majority of Australian wool is traded in US dollars, this significant rise meant that in real terms buyers’ purchases became more expensive.

“Despite this, the market in the eastern centres opened solidly, particularly FNF types (fleece wool carrying less than 1 percent vm),” AWEX said.

“However, as the sale progressed the market eased.

“By the end of the day the Individual Micron Price Guides (MPGs) for Merino fleece in Sydney and Melbourne had fallen by between 1 and 30 cents, the only exceptions were the 17 and 18 micron MPGs in Sydney, which remained unchanged.”

AWEX said the soft finish in the east impacted the west (selling last) and the losses in Fremantle were felt from the outset.

“The market opened weakly and then continued to deteriorate, the western MPGs dropped by between 41 and 59 cents, the western indicator fell by 40 cents for the day.

“The AWEX Eastern Market Indicator (EMI) dropped by 8 cents, finishing the day at 1302 cents,” AWEX said.

“Interestingly, due to the rise in the Australian dollar, when viewed in USD terms, the EMI rose.

“The EMI added US10 cents for the day. The second day the market retracted further.”

AWEX said the MPGs across the three centres fell by a further 11 to 44 cents and the EMI dropped another 18 cents, closing the week at 1284 cents/kg clean.”

AWEX said due to a slight reduction in the AUD the EMI also fell in USD terms, this time by 18 cents.

“Many sellers were reluctant to accept the prices on offer, pushing the passed in rates up across the country.

“By the end of the series 24.8pc of wool failed to reach seller reserve, this was on top of the 5.7pc withdrawn prior to sale.”

Demand slow and sluggish – AWI

Australian Wool Innovation trade consultant Scott Carmody said while demand remains slow and sluggish, outstanding orders to fill from forward book operators helped the sticky market situation with their buying and obviously bought at advantageous rates compared to sold prices throughout the week.

“China indents appeared specific for type and volume restricted, but influenced sale outcomes.

“The China top makers also made a significant contribution, and they lifted buying rates as prices weakened and they followed the market down,” he said.

“In such a weak market, the top makers were able to acquire much better specifications on sale lots than usual.

“The superfine Merino wools – finer than 18.5 micron – were again the most in demand types, but falls of 20-40 cents were still registered,” he said.

“European and Indian buyers are still apparent in this area, but their buying has slowed for the time being.

“More volumes of the better specified superfine lots appeared to be purchased for Chinese orders.”

Rostered volumes spike to near 49,000 bales next week selling on Tuesday/Wednesday and Thursday.

Source – AWEX, AWI.


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