AUSTRALIAN wool prices fell this week with processors across the world seemingly reluctant to take on new inventory.

The Australian Wool Exchange said the market fell, although only by the barest of margins on each day of auctions.

AWEX said the auction series was held in an unusual Wednesday/Thursday pattern to accommodate Monday public holidays in Sydney and Melbourne, while Fremantle also moved to avoid selling in isolation.

With Fremantle returning to the selling program the national offering rose by 6076 bales to 28,882 bales and brokers passed in 8.3 percent.

“Although the smaller than normal offering received good buyer support, particularly higher yielding types which continued to be highly sought after, from the opening lot it was apparent that the prices on offer for many types were not reaching the levels available at the previous sale.

“By the end of the first day the movements in the individual AWEX Micron Price Guides (MPGs) for Merino fleece were mixed,” AWEX said.

“There were pockets of positive movements, a 10-cent rise in the 20 micron MPG in the north the highlight.

“As Fremantle was yet to realise the losses felt in the east in the previous series, the largest falls were recorded in the west, the MPGs dropping by between 18 and 26 cents,” AWEX said.

“The benchmark Eastern Market Indicator (EMI) dropped by one cent, a buoyant crossbred market preventing a larger fall.

“The second day was very similar to the first.”

AWEX said the general weakness in the Merinos countered by strength in the crossbreds resulted in another one cent fall in the EMI.

“The EMI closed the week two cents lower at 1197 cents/kg clean.”

However, AWEX said when viewed in USD terms the market movements were positive.

“The EMI added US3 cents for the series, closing the week at US778 cents.”

Merino prices not helped by low supplies – AWI

Australian Wool Innovation trade consultant Scott Carmody said the extremely low supply on offer this week at Australian wool auctions could not sustain Merino wool prices at current levels.

“A dearer Australian dollar (AUD) against both the US dollar USD (+0.7pc) and Chinese Yuan CNY(+0.5pc) deflated the local auction environment.

“Notably, the market when viewed in both those heavily used currencies to buy wool, the overall market was actually a touch dearer (+0.4 to 0.5pc) indicative perhaps of a demand scenario trying to match supply whilst volumes are so small.”

Mr Carmody said most exporters reported that being able to sell anywhere near profitable levels was becoming exponentially more difficult.

“China does remain in the market, but not with as widespread interest as is usually seen.

“First stage top making buying for that country did lift again with the two largest taking over 30pc of the Merino fleece,” he said.

“India had been in the market, but noticeably weaker enquiry the past two weeks.

“European activity remains subdued at best, with evidence of purchases designated for that region being negligible and when apparent, only on the better end of the market, which is a very low volume sector of the offering at present.”

Mr Carmody said under the current global trading atmosphere, the taking of stock into inventory is becoming frowned upon again.

“The risk is mostly being considered as too high.

“This sees some harder to place wools becoming somewhat neglected and less competition applied to those sale lots,” he said.

“The strength of Chinese top maker buying this week though saw those lots not as price affected as they could have been in larger offerings.”

Mr Carmody said the crossbred wool types and carding types defied the soft sentiment of the Merino fleece segment and the adverse forex rates on offer to forge into higher territory.

“Crossbred wools were a general 10 to 20 cents dearer as were most types within the carding and oddment sector.”

Mr Carmody said the penchance of wool grower sellers wanting to offer and sell was again clear in sale rooms this week as just 8.3pc of the selection failed to meet grower reserves.

About 22,000 bales are being offered next week 51, but due to lower availability of wool at this time of year, Fremantle will sit out and build quantity for the following week 52. Sydney and Melbourne will offer on Tuesday and Wednesday, with vastly lower number of lots to sell.

Source – AWEX, AWI.