Lack of European wool buying hits auction market prices

Sheep Central October 13, 2023

AUSTRALIAN wool prices fell further at auctions this week, with a noticeable lack of buying from European interests.

The Australian Wool Exchange said after managing a small overall increase in the previous auction series, the market has recorded another overall fall this week.

AWEX said after 3.8 percent of bales were withdrawn prior to sale, the national offering of 39,692 bales was only 116 bales fewer than the previous week.

“The prices on offer for Merino fleece types were consistently below those achieved in the previous series.

“By the end of the week the movements in the Micron Price Guides (MPGs) for Merino fleece ranged between plus 4 and minus 61 cents,” AWEX said.

“The largest falls were seen in the fine Merino MPGs, the 17-micron MPG in Sydney and the 16.5-micron MPG in Melbourne losing 53 and 61 cents respectively.

“After being the strongest performing sector over the past few series, the crossbred market succumbed to the falling market this week, with an overall softening recorded, although there was one MPG that managed an increase, the 32-micron MPG in Melbourne rising by 5 cents,” AWEX said.

AWEX said the skirtings tracked a very similar path to the fleece.

“The oddments also finished lower; the three Merino Carding Indicators (MC) dropped by an average of 9 cents.

“The end result of these market movements was a 10 cent drop in the AWEX Eastern Market Indicator (EMI), the EMI closed at 1128 cents/kg clean.”

AWEX said the EMI has recorded ten successive sale days with single digit movements, including one unchanged. Six out of the ten were falls and over this period the EMI has dropped 20 cents.

“The EMI continues to drop compared to the previous season.

“At this stage last year, the EMI was 143 cents higher when it was 1,271 cents, the EMI has fallen by 11.3pc in the year that followed.”

Difficult trading conditions continue – AWI

Australian Wool Innovation trade consultant Scott Carmody said difficult trading conditions negatively affected results at this week’s Australian wool auctions.

“Chinese business remains the cornerstone to the market and the interest from that nation is consistent but somewhat price sensitive as the appetite for risk is extremely low at present.

“Minimal maintenance of inventory to execute orders contracted and then to keep factories running seems to be the current modus operandi,” he said.

“Demand out of India is flowing to sale rooms but at a measured pace, but it is the uncharacteristic lack of European buying for this time of year that is failing to provide the necessary purchasing competition, particularly at the better end of the selection.

“This has resulted in many clips being sold to other users that are usually destined for the European manufacturing sector,” Mr Carmody said.

Mr Carmody said the stronger Australian dollar against the US dollar (+0.8pc) also went against local price levels holding or perhaps improving, but the net result was a basically unchanged indicator in export value or US dollar prices — USD EMI -1.

“The forex rates continue to be problematic for exporters as just a few points swing up sees a potential loss maker as price offers have to be very sharp in the first instance at present to entice the overseas users’ interest,” he said.

“The Merino market continues to be propped up by the local traders whom led the purchasing volumes again this week.

“China’s largest top maker bought around their usual percentage share of the offering, but all other direct buyers or indenters are still lagging in their normal purchase activity.”

Mr Carmody said the volume of purchases for the European sector remains low in value and volume, but with the unfortunate two separate conflagrations over there that is perhaps to be expected.

“Consequently, the losses in the superfine Merino (16.5 to 18.5 micron) segment mean it is being the hardest hit.”

Mr Carmody said after a few months of good percentage increases in price levels, the crossbred wool types experienced their first general losses for some time.

“Albeit these losses were minor with just 10 to 15ac lower prices available.

“The past three months though has seen good gains with 28 micron 24pc higher than July and 30 micron adding 28.4pc in value over the same period.”

AWEX said despite the lacklustre performance of the market in this series, next week the national offering increases. 44,552 bales are currently expected to be offered in Melbourne, Fremantle and Sydney, which is a designated superfine sale.

Sources – AWEX, AWI.


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