AUSTRALIAN Merino wool prices have surged forward this week, led by premiums for non-mulesed Merino lines of up to 250 cents a kilogram.
The Australian Wool Exchange said the market has recorded another overall increase this series, again driven by strong demand on Merino fleece types.
Fremantle sales returned this week, bolstering the national offering and nationally there were 35,357 bales on offer, 4260 more than the previous week.
AWEX said the main buyer interest continued to focus on good style, low vegetable matter Merino fleece lots.
“Strong demand in these types was the catalyst for the overall gains in the market.
“Across the country all Merino fleece Micron Price Guides (MPGs) recorded increases for the week,” AWEX said.
“As Fremantle did not enjoy the gains felt in the East last week, the largest increases were recorded in the west, the MPGs in Fremantle rose by between 70 and 125 cents.”
Non-mulesed wools are highly sought after
AWEX said specialty non-mulesed types continue to be highly sought after by exporters, who are prepared to pay premiums of up to 250 cents above similar spec mulesed types, in an effort to secure these wools.
“By the end of the series the AWEX Eastern Market Indicator (EMI) had added 29 cents, closing the week at 1467 cents/kg clean.
“Lacklustre performances in the other sectors prevented a larger increase in the EMI,” AWEX said.
With the Australian dollar worth US69.99 cents, AWEX said the EMI closed in US dollar terms, closed at US1012c/kg, down US12 cents.
Gap between Merino and crossbred wool prices continues to grow
With Merino fleece tracking upward and the crossbred sector losing ground, AWEX said the gap between the two sectors continues to grow.
“This is best highlighted looking at the difference between the 17 and 28 micron MPGs in the east.
“The difference between the two MPGs has now grown to an average of 2361.5 cents.”
AWEX said the last time the price differential was larger was back in June 2001, when the difference was 2382 cents.
“To put this into perspective, in 2015 this difference was only 499 cents,” AWEX said.
Forex values and demand drove prices – AWI
Australian Wool innovation trade consultant Scott Carmody said a rapidly deteriorating value of the Australian dollar against the US dollar and some prompt demand from the major destinations ensured strong competition would flow into sale rooms.
“As such, prices within the Merino fleece and skirtings escalated substantially from the opening lots sold.
“Some individual sale lots returned over 100 cents better than last week, with most pressure being placed upon the 20 micron area,” he said.
“It was not all positive though as the sale returns for the crossbred wool types and cardings barely held their current values.
“Most of these wools were selling to the buyer’s favour for majority of the week,” he said.
“Just a few cents was gained on the very small offering of the true to type and prepared correctly 29 to 31 micron sale lots, but all others lost 5 to 10 cents.”
Mr Carmody said it is clear that forex rates had plenty to do with the local A$ auction prices accomplished. The WMI (Western Market Indicator) gained 73 cents or 4.9pc to 1563ac, which represents two weeks of market rises after not selling last week.
“Apart from the WMI, the general market indicators masked the true market signals this week.
“The averaging nature of these simple directional tools were not indicative of current conditions,’ he said.
“That is, strong demand for Merino fleece and skirtings, weaker demand for cardings and the continuation of the extremely low levels of interest for crossbred wool types of all descriptions.”
Mr Carmody said after dominating auction rooms for almost the past month, the Chinese top makers and manufacturers were matched and often outbid this week from locals and traders.
“The first stage manufacturing purchasing intent remained strong but as prices rose, they became more price sensitive.”
The national offering reduces for the following series, due in part to Fremantle having another non-sale week. Currently, there is expected to be 30,810 bales on offer with only Sydney and Melbourne in operation.
Click here to see the latest AWEX Micron Price Guides.
Sources: AWEX, AWI.