Online wool sales hit by falling demand before Christmas

Sheep Central, December 10, 2019

AUCTIONSPLUS wool sales were confined to a 25-bale line of Merino fleece wool last week as demand followed the pre-Christmas trend of auction trading.

AuctionsPlus technical operations officer Matt Cotton said prices were down across most types at the physical auctions, with finer types suffering the most dramatic falls.

The weaker trends were reflected online, with just the 25 bales of 21.5 micron Merino fleece selling. The line had a yield of 70.2pc, a an average staple length of 102mm, tensile strength of 32 Newtons/kilotex and a vegetable matter content of 1.8pc. The lot was branded BMCK, offered by Elders South Australia and sold for 1207c/kg greasy or 1738c/kg clean.

The EMI finished the week at 1492c/kg clean, down 38c on the previous week. In US$ terms, this equated to US1020c/kg, down US15 cents. In Sydney, 17 micron wool finished the week at 1908c/kg clean, down 72c. Brokers passed in 19.9pc of the offering.

Mr Cotton said the one exception to the negative trend was cardings, which held firm.

“Reports from the auctions suggest a few key issues at play here.

“With the Chinese New Year falling on the 25th of January next year, last week was the last opportunity prior to Christmas to ship before Chinese mills shut down for the period,” he said.

“Doing business with China in this period is notoriously slow and expensive.

“Wool being shipped to China will need to be stored until mills are reopened, which further diminishes an already tight margin,” Mr Cotton said.

“This all coincides with an influx of supply from growers and a strengthening Australian dollar (against the US dollar).

“Looking at the charts, from the first of December the A$ has risen sharply against the US$ and the Chinese currency CNY,” he said.

“This would have made current prices less attractive.”

Mr Cotton said the number of bales to be offered next week is scheduled to increase 23pc to 48,500.

“The continued influx of supply suggests the coming week’s auctions will remain tough, unless there is a sudden increase in buying pressure globally.

“With the Australian and Chinese holiday periods spanning December and January, it is unlikely that we will see any major change in price or demand until February.”


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