AUSTRALIA’S auction wool market dropped this week as large supplies met sluggish demand in the first sale of the 2022/23 wool selling season.
The Australian Wool Exchange said the market had a soft opening to the season, recording an overall loss for the second consecutive auction series.
“Although the wool on offer attracted good widespread competition, it was apparent from the opening lot in the east that the prices on offer were below those achieved in the previous series,” AWEX said.
“In Sydney and Melbourne, general falls in Merino fleece types of between 10 and 60 cents, were reflected in the individual Micron Price Guides (MPGs) that fell by between 7 and 58 cents.
“The largest drop in prices was felt in the western region,” AWEX said.
The Fremantle auctions sold last this week and prices continually deteriorated on the final day.
“The Merino fleece MPGs in Fremantle dropped by between 42 and 79 cents for the week.
“The skirtings followed a similar path to the fleece, while the oddments and crossbreds recorded minimal overall movements,” AWEX said.
The result of these market movements was a 23-cent reduction in the AWEX Eastern Market Indicator to 1407c/kg clean.
“After finishing the year 7 cents above last year’s close, the EMI has now fallen below the corresponding sale of the previous season,” AWEX said.
“At 1407 cents, the EMI is now 13 cents lower than the 1420 cents it closed Week 1 at in the 2021/22 season.
“When viewed in US dollar terms the fall in the EMI is more significant, as the Australian dollar is 6.67 cents lower than this time last year, the EMI is US104 cents lower than Week 1 last season.”
Techwool Trading dominates auction buying
Australian Wool Innovation trade consultant Scott Carmody said buyers took full advantage of the abnormally large supply of wool available and the sluggish demand and sellers generally showed little intent to protect the established levels, evidenced by the relatively light passed-in rate of 14.8 percent.
“Just a few wool types within the crossbred descriptions escaped the downward pressure.
“The very small offerings of the finest (26 micron) and broadest (32 micron) edges of that selection posted gains of 5 to 10ac clean/kg,” he said.
Mr Carmody said Australia’s largest trading house (Techwool Trading) stepped up and exercised its considerable buying strength to compete heavily and dominate the two largest players of the Chinese top making sector.
Techwool Trading topped purchasing in three of the four wool type sectors.
“Within the Merino fleece lines alone they purchased over 20 pc of the offering, which was over 5000 bales for the week and upwards of a total of 8000 bales went into their inventory, roughly estimated at over a $15 million spend.”
Mr Carmody said the two big Chinese top makers also found the cheaper buy-in levels attractive and showed consistent buying interest by keenly following the market down throughout the week.
“As the week progressed, other Australian traders started to cautiously buy, but the usual participation from indent buyers remained quiet in percentage buying terms.”
Mr Carmody said for overseas-based manufacturers and traders using US dollars, the average price of wool (USEMI) is the cheapest it has been for 18 months.
“The previous low was January 2021 when the price of US934c/kg clean was available to buyers when COVID-reduced pricing and consumer buying at retail hit a low point.”
Next week more than 61,000 bales are catalogued over three days, the largest sale week scheduled for quite a few years. This will be the final sale before the annual three-week mid-year recess and the national offering increases considerably, as sellers take the final selling opportunity before the break. Currently, there are expected to be 61,054 bales on offer nationally. If this quantity eventuates it will be the largest wool sale since Week 36 of the 2019/20 season, AWEX said.
Sources – AWEX, AWI.