Markets

Rising Australian dollar hits wool prices hard at auctions

Sheep Central, February 5, 2016

Wool sales Landmark1 MelbourneWOOL prices fell this week as an appreciating Australian dollar cruelled demand, although demand remains stable.

Carding prices slumped 20-40 cents, crossbred wool rates fell up to 20 cents in Sydney, but good spec 16-18 micron wool is being keenly sought.

The AWEX Eastern Market Indicator fell 15 cents to 1265c/kg clean, with brokers passing in 10.4 percent of the 44,906 bale offering.

The EMI in US dollar terms lifted 7 cents to US909c/kg as the Australian climbed US1.4 cents to US71.86 cents.

AWEX senior market analyst Lionel Plunkett said the AWEX Eastern Market reduced by 15 cents over the three days of selling in Sydney, Melbourne and Fremantle.

“The falls were generally confined to the opening day in each centre; Tuesday for Melbourne when it sold in isolation, and Wednesday for Sydney and Fremantle.

“The 17.5 to 19.5 micron range contained around half of the Merino Fleece offering and this bore the brunt of the softer prices with values dropping 20 to 30 cents,” he said.

“After settling at the new levels the results were much more positive for the remainder of the sale.

“Market rates remained steady and even managed increases late on Thursday.”

Mr Plunkett said the better types were well-supported during the week and extended their premiums over lower spec types.

“Competition is particularly keen in the 16 to 18-micron range where buyers are bidding up for the “right” specs.

“Also receiving good support during the sale was the medium-broader range in the Merino sector, which managed small week-on-week increases in Melbourne,” he said.

Merino skirtings followed the fleece lower, easing by 30 cents over the course of the week.

Crossbred and carding wool prices slump

Crossbred volumes were well down on recent weeks with 8,642 bales offered nationally, compared to almost 13,000 bales offered in each of the first two weeks of January, Mr Plunkett said.

“Despite the lower quantity prices tracked lower; as much as 20 cents cheaper in Sydney which had overshot the Melbourne market.”

He said falls of 20 to 40 cents in the Merino Carding Indicators made it one of the worst performing sectors for the week.

Australian Wool Innovation’s weekly market report said wool market movements this week largely reflected the appreciation of the Australian dollar against the US dollar.

“Demand remains reasonably strong in most sectors and sporadic new business is available but price sensitivity expressed in USD per kg is the ruling factor at present.

“Indicative of stable demand is the EMI when expressed in USc/kg, as it strengthened US5 cents to US907c/kg,” the report said.

“Current prices are 15 percent higher than at the same time period last year in A$ terms, while in US$, 6pc higher.”

Next sale is currently forecast at 40,659 bales, about 10,000 bales below the average of the previous four auctions.

With our major customer China and other Asian nations off on a break celebrating the Lunar New Year, we cannot see too much radical change to the current market trends in place, AWI said.

Click here for the latest AWEX Micron Price Guides.

Sources: AWEX, AWI.

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