Positive move in wool market tipped with steady lower dollar

Terry Sim, September 17, 2014

Wooltrade logoProcessor feedback, a steady lower Australian-US exchange rate and an average-size bale offering indicate there will be positive movement in fleece wool prices this week, according to AuctionsPlus Wool and WoolTrade market operations manager Tony Benson.

Mr Benson said he had heard positive comments from the recent Nanjing Conference in China where “a little bit of business was done”.

Australian dollar steadying around US90 cents

The Australian dollar was steadying around US90 cents and 46,000 domestic bales were being offered at auction this week. The Eastern Market Indicator in US dollar terms last week dropped 18 cents to 940 cents, making it cheaper to buy Australian wool.

Mr Benson was optimistic there would be a 10-20 cents a kilogram clean lift in Australian fleece prices at auction this week.

“I think we won’t see the market slip away.”

Mr Benson said other export commodities such as iron ore and gold rallied since the weekend on the back of the currency change.

“We should expect wool to do something similar.

“I am certain that the market is firming up, based on our sales, buyers logged in and the levelling out of the dollar just above US90 cents.”

Mr Benson said Australia’s wool market finished cautiously last week as prices ended slightly cheaper in most cases, with several factors coming into play.

“The Australian vs. U.S. dollar exchange rate has had a tough time of late and is now trading near US90c, a six-month low.

“Most would think this is good for an exporter of Australian wool, but rarely does the market change until a base price has been found,” he said.

“Another factor to consider is that China is having a weak patch in industrial production and Australia supplies a lot of raw material to them.

“This factor is placing pressure on our currency as demand has eased for a range of raw materials including wool.”

WoolTrade lots selling above indicator

Mr Benson said the top price on Wooltrade last week was 1834c/kg clean for a handsome 15.2 micron Merino fleece lot offered by Fox and Lillie Rural and branded NP/E. The lot had just 0.2pc vegetable matter, a yield of 70.9pc, staple length of 84 millimetres and a tensile strength of 37 N/kt.

Premiums were being paid for those wools with good results for strength and mid-break with the top price for 17 micron wool being 1274 cents clean for 46Nkt, 99mm Fleece wool yielding 78.5pc, about 37 cents above the indicator, he said.

The 19 micron Merino fleece sold for up to 1205 cents a kilogram clean for a 19.4 micron, 99mm and 31N/kt lot.

“The stand-out for the week was nine bales of 20 micron Merino fleece at 95mm and 33N/kt selling for 1223c/kg clean when the indicator was at 1139 cents, a whopping 84 cent difference.”

Over 100 bales were traded on the weekend of mostly fine fleece but prices were fully firm and a good sign of a stable market this week.

Mr Benson said rates were sold for the cardings-dominated offering in the AuctionsPlus Wool sale this week, but rates were still at an historical high.

Source: AuctionsPlus Wool


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