Pre-recess wool buying lifts auction prices for second week

Sheep Central, July 14, 2023

WOOL buyers this week paid more for Merino and crossbred wool to secure supplies before a three-week recess of auctions.

The Australian Wool Exchange said the market recorded another overall increase this auction series, posting a positive result for the second week in a row.

“As the market is about to head into the mid-year recess this was the final chance to sell wool until Week 7.

“There were 43,697 bales on offer nationally, this was 7,538 bales more than the previous week,” AWEX said.

“The total amount offered over the first two weeks of this season is now well below the same time last year.

“There have been 79,856 bales offered, 24,414 less than the previous season, a reduction of 23.3 percent.”

AWEX said as this was also the last opportunity to buy through auction until August, buyer sentiment was high, which in turn translated to spirited bidding across all sectors of the market.

“This resulted in price increases across most sectors, but particularly in Merino fleece types.

“Most of the market gains were felt on the first day,” AWEX said.

“The individual Micron Price Guides (MPGs) across the country for 17.5 micron and coarser fleece added between 3 and 54 cents for the day, with 20 micron and coarser wools enjoying the largest gains.”

AWEX said the crossbred sector also had solid rises, particularly 26 and 28 micron wool in the south, that added 28 and 21 cents respectively. The AWEX Eastern Market Indicator (EMI) rose by 17 cents for the day.

The second day was varied across regions, microns and types, AWEX said.

“The movements in the Merino fleece MPGs ranged between minus 24 and plus 18 cents, the EMI remained unchanged.

“This is the best start to a new season since 2020, when the EMI rose by 24 cents over the opening two sales, and a marked improvement on the previous year, when the EMI dropped 42 cents over the opening two weeks.”

Overseas buyers commit to new prices levels – AWI

Australian Wool Innovation trade consultant Scott Carmody said local buyers were in the mood for purchasing , that placed nearly all prices on a strongly upward trajectory from the outset.

“The most well sought after commodity were the Merino wools from 19 to 22 micron. that pushed 3 percent higher almost immediately as auctions commenced.

“The super fine Merino categories were by no means neglected, with a healthy 20 cents/kg clean added, whilst crossbred wool types and cardings traded fully firm to slightly dearer,” he said.

“The initial reticence from customers to follow last week’s strong price gains was somewhat dismissed this week as those overseas users in need of prompt supply committed to the new price levels,” Mr Carmody said.

“This turned out to be an opportune move as both the auction clean price levels and forex rates (mainly AUD v USD) forced CIF (price in export terms – ie cost, insurance, and freight) prices up even further.

“Those needing wool for new contracts now the auctions have closed for three weeks would be wholly subject to the closing spot price from those exporters willing to go short or choosing to dispose of any greasy stocks held,” he said.

Mr Carmody said local traders were largely responsible for the gains of the wool values the past fortnight.

“Completion of open forward books for July and August shipments combined with a fresh business enquiry to create the dearer market.

“As higher prices became available from users, exporters were given an opportunity to try and “average” the old (set) and new contract prices to minimise the projected losses on those out of the money forwards written before the price rises,” he said.

“The direct China top maker buyers were not eliminated from buyers’ lists, but certainly had to yield to paying the higher prices being set by traders to acquire supply to see them through the three-week sales recess.

“Looking from the outside in, those top makers are probably quite pleased with the current market, given the value add to their output of wool top production would be 5pc higher than a week ago.”

The market now heads into the annual three-week mid-year recess. Sales will resume in the week beginning Monday the 7th of August.

Click here to see the latest AWEX Micron Price Guides.


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