Markets

Merino fleece rebounds 40-50 cents with smaller offering and dollar movement

Sheep Central, April 29, 2016

AWEX logo1WOOL prices rebounded this week – up 40-50c/kg clean for most Merino fleece — as the Australian dollar drifted lower against the US currency.

AWEX senior market analyst Lionel Plunkett said there was a sharp reversal in the market as the exchange rate continued to play havoc with local pricing.

“The benchmark AWEX Eastern Market Indicator gathered 24 cents for the week, recovering all of its losses from last sale.

“The Aussie dollar also changed tack, falling almost two cents over the week and making its biggest one-day fall in eight months,” he said.

As the AWEX EMI climbed back to 1241c/kg clean, brokers passed in just 5.6 percent of the 34,397 bale offering, 7685 fewer than last week. The EMI in US$ terms fell four cents to US946 cents as the A$ lost US1.86 cents to finish at US76.21 cents.

Mr Plunkett said the currency slump came amid negative inflation data and Australian interest rate speculation.

“In US terms the EMI has barely moved over the past fortnight despite the turbulence in local terms.”

Merino fleece types lifted fairly equally each sale day, resulting in gains of 40 to 50 cents clean for most microns.

“There was initially a strong start at the start of the week and improving momentum continued to carry the market higher through Wednesday and into Thursday.

“It was only late on the second day when any indication of a lull in the market appeared,” Mr Plunkett said.

There was a tapering off in price toward the close of Melbourne’s large catalogue on Thursday, but it was mainly on lower spec and higher vegetable matter (vm) types which are becoming increasingly commonplace, he said.

“Merino fleece types with more than 1pc vm accounted for 53.5pc of the national catalogue this week, a two-year high, and discounts are now emerging.”

Merino skirtings also showed the effects of increasing vegetable matter this week.

“The 3pc vm and less (wools) maintained good support while those with higher percentages tended to struggle.

“While Merino cardings also showed price spreads, the MC Indicators closed largely unchanged, apart from Fremantle which firmed 11 cents.”

Bale offerings are expected to hover between 35,000 and 38,000 over the next three weeks, Mr Plunkett said.

Source: AWEX

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