NON-MULESED wools are growing their demand base, while other Australian wool is suffering from recent subdued buyer interest.
G Schneider Australia managing director Tim Marwedel said in his eastern states market report this week that prices for non-mulesed wool were unchanged, while all others were generally cheaper.
After the last auctions for the 2018-19 season, AWEX reported yesterday that lack of buyer confidence pushed Australian wool prices lower for the fourth consecutive week, with the benchmark Eastern Market Indicator falling 51 cents to 1715c/kg clean.
AWEX senior market analyst Lionel Plunkett said better style well-measured wools were generally 70-100 cents easier. Lesser style wools and those with poor additional measurement results were even harder hit, up to 150 cents cheaper, as buyers looked for value in the continually falling market. Brokers passed in 20 percent of the offering of 29,167 bales, 10,095 more than last week. The EMI in $US terms fell 18 cents to US1199c/kg.
Mr Marwedel said there is now more widespread demand from end users for non-mulesed wool and the National Wool Declaration is protecting these lots from the continuing downward price trend. He said non-mulesed wool now had a different demand base than other wools.
“It’s not about a premium or a discount, it is ‘yes or no.’”
Mr Marwedel said there was enough demand for non-mulesed wool yesterday to keep prices for those lines unchanged.
“They (non-mulesed wools) are creating their own market now.
“You’ve got to separate them in your quotes, because they are not behaving the same way …. If you’ve got two options you will take the non-mulesed one, because you know you can sell it.”
He said the some of the non-mulsed wools this week were better spec wools, but some were not.
“Yes and no, the finer you go there is more necessity for the wool to be of better specification, but once you get to 19 microns and broader it seems less important, because there are less of them (NM lines).”
Mr Marwedel said wool quality and specifications are still important, particularly at the finer end, but it is less of an issue for broader wools.
“What I am hearing now is that with the reduction in quantity in Australia, we are now not such a commanding force in terms as a percentage of volume available globally.”
Without collating the volumes of wool in the leading countries, he expected that the overall amount of wool, and especially non-mulesed wool, from South Africa, Argentina and New Zealand combined, might not be far behind Australia’s production.
“We are finding that some of our customers are now starting focus outside of Australia, which is a real concern, which is disappointing for all producers, not just for those that don’t mules.
“I think the profile of the Australian wool grower should be much higher; the care and professionalism of them far exceeds those in other countries, but unfortunately it comes back to mulesing,” he said.
“I’m hearing more often than not now, about all the business being done with Argentina and South Africa, although it (SA) is closed for a few months – it’s a different story.”
According to AWEX’s premium and discounts report for the northern and southern auctions this week, the non-mulesed premium for 18 micron fleece wool was 43 cents, for 19 micron lines it was 40 cents and for 20 micron lots it was 22 cents, with smaller premiums for ceased mulesed (CM) and pain relief (PR) declared wool. AWEX also record an 8 cent premium for non-mulesed 25 micron fleece wools, and a 14-cent premium for CM and PR lines.
EMI suffers second highest monthly fall
Mr Plunkett said the EMI has now fallen for all four sales held in June, losing a total of 172 cents over the month.
“This is second highest monthly fall in the EMI ever.
“The largest was in March 1991 when the Reserve Price Scheme was abolished,” he said.
In percentage terms the EMI lost 9.1pc for the month, the largest percentage monthly fall since August 2012, when it fell by 12.1pc. In March 1991, the EMI dropped 272 cents or 36.5 cents to 474c/kg clean.
Prices for skirtings also dropped sharply this week, generally 50 to 100 cents, with wools carrying more than 5pc vegetable matter most affected.
Crossbred wool recorded falls, generally easing 30-50 cents, but not to the same extent as the Merinos, Mr Plunkett said.
Demand is the dominant factor in market doldrums – AWI
Australian Wool Innovation’s weekly market report said the positive signs that emerged at the end of the previous week’s selling had swiftly dissipated before sales commenced this week.
“The $A had strengthened against the USD (+1.4pc) and CNY (+1.6pc) giving cause for our overseas buyers to remain on the sidelines.
“The current demand through the entire wool supply chain, remains the predominant factor for the market doldrums,” AWI said.
“Demand for the raw, greasy product is presently described as being subdued at best.”
“As the season drew to a close, the market fizzled out in the last month and failed to replicate what had largely been a stellar, record-setting year.
“The EMI in $A set an all-time high of 2116c/kg in August, nearly all individual micron categories broke their previous bests and the season average of 1939 cents was the highest on record and indeed 200 cents or 11.5pc higher than the average price of 1739 cents received in the 2017/18 season.
“In $US terms, which is perhaps more indicative of reliable demand source scenario, the EMI moved US40 cents or just 2.9pc higher for the 2017/18 seasonal average of US1346 cents to the 2018/19 season average of US1386 cents,” AWI said.
“It is imperative to note though that the $A v $US forex rate has actually decayed from the 2017/18 season average of 0.775 compared to the 2018/19 rate of 0.716, which is a 7.6pc advantage to the favour of the $A price.”
AWI said market purchasing this week was again dominated by the Chinese top makers, traders and downstream processors. Indent buying remains sparse.
“The reduction in supply in recent weeks and months has been outweighed significantly by the slowing in demand from the Northern Hemisphere, which has had a strong effect throughout the supply chain.”
Mr Plunkett said the first sale of the new season is traditionally one of the larger sales for the year, as growers looking to sell in the new financial year take the first opportunity. This year; however, the sale is smaller than normal, perhaps due to the deteriorating market. Currently there are 34,504 bales rostered for sale in Sydney, Melbourne and Fremantle.