Markets

Rising $A, big offering and floods erase wool price gains

Sheep Central, January 29, 2016

wool bales dec15-14WOOL prices fell back this week, as the Australian dollar strengthened and floods hit a scouring plant and wool store in Geelong.

The AWEX Eastern Market Indicator closed down 16 cents to 1280c/kg clean, with brokers passing in 13.5 percent of the 45,434 bale offering.

The Australian dollar appreciated more than 2 percent during the week to US70.46 cents and the EMI in US dollar terms lift 7 cents to US902 cents.

The Australian Wool Innovation weekly wool report said several factors, including floods in a Geelong scouring plant and a brokers wool store, access to finance locally and heavier than expected offerings were all cited as market influences.

“However, the more significant factor in the market was Australian dollar strengthening by over 2pc against all of the major currencies such as the USD, Euro and CNY.”

AWEX senior market analyst Lionel Plunkett said Wednesday trading in all centres showed an easing of the strong market during last week.

“Merino fleece was generally cheaper, 5-10 cents, in all centres with lots of lower spec wools — lower strength, higher mid-break and higher vegetable matter content — most affected, recording falls of up to 20c/kg.

“Fleece finer than 18.5 with better specifications were least affected easing only slightly,” he said.

Mr Plunkett said Merino skirtings fell 10 cents and the 28 micron crossbreds were generally 5 cents cheaper. Locks were unchanged, though a 10-cent fall was recorded in Fremantle.

The trends set on Wednesday continued on Thursday, though Merino fleece was less well supported, he said.

“Merino fleece fell 15 cents with lower specs recording greater falls.

“Merino skirtings were generally 10 cents lower, as were crossbreds.”

Mr Plunkett said oddments fell by up to 10 cents. Nationally, more than 17pc of Merino fleece types were passed in, showing some seller resistance to the change in fleece price levels.

Aussie dollar and fresh demand to set tone next week

AWI said the strengthening Aussie dollar will determine the initial sentiment of buyers next week, but some fresh enquiry converted to sales look like the necessary ingredient to keep the market on track.

“This week’s increased pass-in rate of 13.5pc demonstrates woolgrower’s lifted expectations for their product.

“This year’s Chinese New Year is approaching fast, with most of the Chinese traders looking forward to their annual break,” the report said.

“Most wool user participants are believed to be absent from their office and factories for at least a week, commencing Monday, February 8.”

More than 47,000 bales are rostered for sales in three centres next week, with the Sydney sale S32 designated as an Australian Superfine Sale.

Sources: AWEX, AWI.

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