Insatiable Chinese demand lifts wool into record territory

Sheep Central, June 1, 2018

Merino wool.

INSATIABLE demand for Australian wool drove auction prices to a new historical height this week, with the industry benchmark indicator peaking 555 cents a kilogram higher than 12 months ago.

AWEX senior market analyst Lionel Plunkett said the AWEX Eastern Market Indicator closed yesterday at 2027c/kg, a weekly rise of 44 cents.

“As the season heads into the traditional quiet time of year, quantities continue to decline, forcing buyers to have to work hard to secure their share of the reduced offering,” he said.

Brokers passed in just 2.3pc of the 30,439 bales offered as strong demand was evident from the outset of auctions in Sydney, Melbourne and Fremantle.

“All types and descriptions, regardless of style and spec, across the entire Merino spectrum were swept further into record territory.

“By the final hammer prices had generally risen by 40 to 60 cents,” he said.

“After four consecutive large weekly rises, the EMI has now added 190 cents over the previous month, an increase of over 10 percent.

“This is the largest monthly percentage rise in the EMI in over five and half years,” Mr Plunkett said.

“The skirting market behaved very similarly to the fleece, small impurities e.g. colour or cott, were basically overlooked as buyers scrambled to secure meaningful quantity.

“Prices generally increased by 40 to 80 cents, wools finer than 18.0 micron and those carrying less than 4pc vegetable matter recording the largest gains.”

Mr Plunkett said the crossbred sector had another week of mixed results, with 30 to 32 micron wool again failed to attract strong support and recorded little movement. The 25 to 28 micron lines, on the other hand, were strongly contested, pushing prices up by 25 to 55 cents.

“A limited offering of oddments received solid support, which was reflected in the three carding indicators rising by over 11 cents.”

Due to the Fremantle market having a recess in Week 49, quantities significantly reduce, currently there is 27,270 bales rostered for sale, selling in Sydney and Melbourne only.

The Australian Wool Innovation weekly market report said the EMI figure in $US  — up 32 cents to US1533c/kg clean — underscored the fact that exponentially increas-ing demand is the key price determination factor in play at present and is the undisputable market driver.

“Chinese purchasing continues unabated, with many exporters declaring the Chinese appetite for wool at present as being “insatiable”.

“Other usual global destinations for our wool are finding it hard to compete and are being outpriced by Chinese orders daily, AWI said.

“Even more impressive is the 41pc year on year increase in the $US price levels, out performing local $A returns by 8.3pc.”

Click here for the latest AWEX Micron Price Guides.

Sources: AWEX, AWI.


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