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Merino wool prices hold, but crossbreds drop

Sheep Central, February 12, 2021

MERINO wool prices lifted in Australia this week, but crossbred fleece values fell, dragging market benchmarks down.

Australian Wool Exchange senior market analyst Lionel Plunkett said a large selection of Merino fleece types recorded positive price movements.

“There were 49,810 bales available to the trade and this larger than normal offering attracted strong demand, from the opening lot all the way through to the final hammer,” he said.

Brokers offered 4684 more bales this week, and passed in 12.6 percent of the offering.

Mr Plunkett said the main buyer interest continued to be in the finer microns and this was reflected in the individual Micron Price Guides (MPGs) for 19.5 micron and finer, which added between 2 and 45 cents for the week.

Mr Plunkett said it was only losses in the other sectors of the market – medium Merino wool in Sydney and Melbourne, and crossbreds nationally — that prevented the AWEX Eastern Market Indicator (EMI) from recording a positive movement for the series.

“The EMI lost 10 cents for the week, closing the week at 1275c/kg clean.

“Worth noting, due to the strengthening of the Australian dollar — the Australian dollar was US1.1 cents higher than at the close of the market last week — when viewed in US dollar terms the EMI recorded positive movement for the series,” he said.

In US dollar terms, the EMI added US6 cents for the week to close at 985 US cents.

“Also worth noting, the Western region, which does not have any crossbred components in the makeup of its indicator, recorded overall positive movements for the series,” Mr Plunkett said.

The Merino fleece MPGs in Western Australia added between 2 and 10 cents for the week, helping to push the Western Market Indicator up by 1 cent.”

Crossbred were worst performers

Mr Plunkett said after performing well for the first four sales of the 2021 calendar year, the crossbreds were the worst performing sector in percentage terms this series, playing a large part in the overall loss in the EMI.

In Melbourne the 26 micron MPG dropped 65 cents (-8.1pc), the 28 MPG dropped 32 cents (-5.8pc) and the 30 micron MPG lost 31 cents (-7.3pc).

Larger volume failed to dampen enthusiasm

AWI trade consultant Scott Carmody said this weeks’ Australian wool auctions featured a good selection of super fine Merino wools 18.5 micron and finer, grown in Tasmania and sold in Melbourne. The stylish offering received excellent support from the trade and helped the Southern price indicators extend above all other centres and be upwards of up to 45c/kg dearer for the week, he said.

“Despite the appetite for new business being more selective from China this week, the market held on and improved across many wool types, against the pre-sale expectations of a potential softening.

“The relatively larger volumes available for sale continue, but failed to dampen buyer enthusiasm,” he said.

“Traders dominated at the top of the buyer lists, but top makers and processors were competitive throughout.

“Indent operators also contributed in a week that seemed to interest all buying companies globally,” Mr Carmody said.

“Wool markets appear to be moving towards more of the “normal”, pre-pandemic economy levels and their associated expected patterns.

Mr Carmody said italian buying was very apparent, as the quality of wool suitable for their high end needs became available, and purchasing from the large European top maker continues.

“Additionally, smatterings of orders destined for the sub-continent provided good support, but it is still very much the Chinese domestic manufacturing and consumption market that is providing the backbone to the Australian wool price.”

Next week’s national offering is fairly similar, there are currently 48,977 bales on offer.

Click here to see the latest AWEX Micron Price Guides.

Source – AWEX, AWI.

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