AUSTRALIAN wool growers reacted quickly to reduced prices at auctions this week, passing in more than 15 percent of the national offering.
With some fine Merino prices falling by up to 60 cents/kg clean, the Australian Wool Exchange said the reductions were met with seller resistance, pushing the national passed-in rate up to 15.3 percent.
This was 8.8pc higher than in the previous week – when solid price rises were recorded – and followed the withdrawal of 5.3pc of the catalogued offering prior to auctions starting, leaving 47,558 bales for sale, only 112 bales more than last week.
AWEX said the opening day of selling on Tuesday provided mixed results. Some better style wools, particular non-mulesed types and wool with favourable additional measurement results, attracted solid buyer support and recorded very little change from the previous sale.
“Lesser style wool and those with poor additional measurement results did not receive the same level of support and were highly irregular in price but trending downward.
“The movements in the individual merino fleece Micron Price Guides (MPGs) in the three selling centres, ranged between +21 and -28 cents,” AWEX said.
On the back of these movements, the AWEX Eastern Market Indicator (EMI) fell by 8 cents. On the second day of selling on Wednesday, prices continued to fall as the sale progressed. As a result, the Merino fleece MPGs in the Western region all finished below those in Sydney and Melbourne, AWEX said.
AWEX said across the country, the MPGs moved between 0 and -48 cents. These losses combined with falls in the other sectors pushed the EMI down by a further 15 cents. The EMI closed the week at 1,319 cents an overall loss of 23 cents, a 1.7pc reduction.
The crossbred sector recorded the largest losses in percentage terms for the week. The crossbred MPGs lost between 16 and 30 cents, with the 25-cent fall in the 32 micron MPG representing a 9pc drop.
High percentage of wool difficult to place
Australian Wool Innovation trade consultant Scott Carmody said pre-sale feelings were initially that the wool market would be quite firm, with a few larger exporters suggesting a dearer market was possible.
“By Monday afternoon though, it became evident to all that the market was going to suffer a little as the rostered volumes for sale grew rapidly for upcoming auctions.
“Week 46 was scheduled for 38,655 bales, but that expanded to 54,752 bales – a 41pc increase in one week and Week 47 has grown 22pc,” he said.
But Mr Carmody said the simple matter of numbers of bales affecting markets does not tell the whole story.
“Additionally, amongst the selection there is a high percentage of wools that are more difficult to place.
“Higher vegetable matter content types from this year and low yielding wools from the past seasons that have been held make up a good deal of the offered quantities.
“As prices for these types backtrack it infects the market with a softer tone and other sectors get dragged down,” he said.
“With logistical problems widely published, the tying up of buyer finances remains somewhat problematical.
“The ability of buyers to plan purchasing strategies and execute those plans has become a guessing game, as deliveries can be 2 to 4 week delayed into China and “months” to other destinations,” Mr Carmody said.
“The evidence on display is that whilst bale numbers being sold are still high, the trade has absorbed these extra quantities and the price has remained largely buoyant.
“Some say that wool prices have defied expectations during the entire COVID-19 influence, apart from the sharp drop off in August/Sept of 2020,” Mr Carmody said.
“Even under volume and quality pressures, prices have remained stoic.
“The competition and eventual export destination is dominantly Chinese with just a smattering of Indian and Euro deliveries being made.”
Next week’s national auction offering has increased, with 48,245 bales currently on offer in Sydney, Melbourne and Fremantle.
Click here for the latest AWEX Micron Price Guides.
Sources: AWEX, AWI.