WOOL prices lost ground this week, driven mainly by losses in the Merino fleece sector, the Australian Wool Exchange said.
The national offering fell to 37,630 bales, due in part to the 5.3 percent of wool withdrawn prior to sale.
“Unlike last week where it was mainly the finer Merino microns recording losses, this week the falls were felt across all merino fleece types and descriptions.
“The bulk of the losses were felt on the first day of selling, across the country the individual Micron Price Guides (MPGs) for 16.5 through to 21 micron lost between 9 and 82 cents, with only the 22 micron MPG in the south managing a nominal 4-cent increase,” AWEX said.
“These falls contributed to a 14-cent reduction in the AWEX Eastern Market Indicator (EMI).
“The second day of selling the market settled to a degree, in the eastern markets the movements in the MPGs ranged between +16 and -20 cents,” AWEX said.
In Fremantle, selling last on the final day, the market recovered slightly, and this was reflected in the western MPGs which ranged between -1 and +9 cents, showing promising signs for next week’s sales, AWEX said.
“The EMI lost 7 cents on the second day, dropping 21 cents for the series, closing at 1319 cents.
“Understandably, the drop in the market pushed the national passed in rate higher, as many sellers were either unwilling or unprepared to accept the prices on offer,” AWEX said.
“The passed-in rate nationally was 14.2pc, this was 4pc higher than in the previous series.”
AWEX said despite the falls experienced so far in the 2021/22 season, the market is still beyond the price levels of this time last year.
“Compared to the corresponding sale of the previous season, the EMI is 130 cents higher, an increase of 10.9pc.
“Despite the softer market, the national offering for next week has climbed. 44,754 bales are currently expected to be offered in Sydney, Melbourne and Fremantle.”
Diminishing enquiry levels from China – AWI
Australian Wool Innovation trade consultant Scott Carmody said buyer confidence was low from the start with a diminishing levels of enquiry from China prompting cautious purchasing activity from most operators.
“As a result, the national clearance rate dropped off to 85.8pc of all wool offered sold into exporters’ hands.”
Mr Carmody said China demand is remaining somewhat subdued as a few dominant factors impinge upon the normal supply chain operations.
“Restriction of power as a coal shortage and environmental targets regime are being enforced has led to most factories being electricity rationed.
“In many instances this means a three day working week, obviously limiting needs for raw material inputs, factory production outputs and pay to employees whom are ultimately consumers,” he said.
“Zero Covid tolerance policy is also an inhibitor.
“These factors have all led to the current sluggish Chinese domestic demand for goods and more-so, the luxury goods sector that most wool garments fall into.”
Mr Carmody said conversely, the purchasing activity from European and the sub-continent has been the best seen for a few years.
“This renewed buying interest has helped the market hold on relatively well, particularly at the super fine (less than 19micron) end of the type spectrum.”
Two of the largest traders plus the major Chinese top maker dominated buying lists, he said.
Click here to see the latest AWEX Micron Price Guides.
Sources – AWEX, AWI.