INCREASED wool supplies, logistics issues and a fire at a major Chinese processor have contributed to a significant fall in the Australian wool market this week.

The Australian Wool Exchange said in the final sale of the 2021/22 wool selling season and after three weeks of consecutive rises, the auction market has been unable to continue its upward path.

Instead the market’s benchmark, the AWEX Eastern Market Indicator, recorded an overall loss of 44 cents to 1430c/kg clean, driven by falls in the Merino fleece types.

After a non-sale week in the previous series, Fremantle returned to the selling roster, pushing the national offering up to 43,055 bales, 13,498 bales more than last week, AWEX said.

“At the conclusion of the series, the total amount of wool put through the auction system totalled 1,861,928 bales, this was 122,766 more bales than the previous season, and an increase of 7.1pc.

“Across the country, the individual merino Micron Price Guides (MPGs) fell by between 5 and 125 cents,” AWEX said.

The result was the largest weekly fall in the EMI since August 2021.

“Interestingly, the drop is within one cent of the 45-cent fall in the EMI at the final sale of last season.”

AWEX said over the past 12 months the EMI has risen by 7 cents, a small 0.5pc increase.

“This is compared to the 313 cent rise in the EMI over the 2020/21 season.”

AWEX said the total dollar amount sold for the 2021/22 season finished well above the previous year.

“This season the total value of wool sold was $2,619.57 million, compared to $2,246.72 million last season, an increase of $372.85 million.

Supply, shipping issues and processor fire hit market – AWI

Australian Wool Innovation trade consultant Scott Carmody said with the large drops in value, the national clearance rate fell to just 79.7pc of all wool offered being cleared to the trade.

“This figure was strongly influenced by the high passed-in rates of the Merino fleece sector in Melbourne(24.5pc) and Fremantle(30.5pc), but oddly Sydney saw just 10.7pc passed in.”

Mr Carmody said the large wool volumes available this week and over the next two weeks let buyers ease their purchasing intensity substantially and allowed them to buy freely to their advantage.

“To put in perspective, prior to this week there had been 96,261 bales offered in three weeks, whilst this week and the next two will see an estimated 139,080 bales or 44.5pc more wool going before the trade in the same time.

“This is a similar pattern each year and should be somewhat predictable,” he said.

Mr Carmody said additional factors also conspired against the market fortunes this week.

“One was a serious fire at one of our largest processors in China preventing their normal operations.

“Also, an adverse shipping situation occurred whereby delays and cancellations of vessels saw some buyers funds are being delayed by 10 days or more than what was originally accounted for,” he said.

Sheep Central understands the fire occurred at the Zhejiang Redsun Wool Textile Company’s complex in the eastern coastal Zhejiang Province.

Next week is the first sale of the 2022/23 wool selling season and this sale is traditionally one of the largest of the year, as sellers wanting to offer in the new financial year take the first opportunity. Currently, there is expected to be 52,182 bales on offer in Sydney, Melbourne and Fremantle.

Click here to read the latest AWEX Micron Price Guides.