AUSTRALIAN wool prices surged this week, but are expected to be challenged next week, with the largest bale offering since early August this year rostered for sales nationally.
Australian Wool Exchange senior analyst Lionel Plunkett said auction market had a rollercoaster ride this week, with large upward and downward movements experienced in the series.
“From the opening lot on the first day, buyer sentiment was extremely positive, it was immediately apparent that the market was heading rapidly higher.
“By time the final hammer fell in the west, the individual Micron Price Guides (MPGs) across the country had risen by 110 to 153 cents,” he said.
The AWEX Eastern Market Indicator added 123 cents for the day, which equated to an 11 percent increase, he said.
“This was the second largest rise on record for the EMI, only beaten by the 130 cent gain the EMI recorded in September last year.
“The EMI closed the day at 1240 cents, which was the highest the EMI has been in the current season,” Mr Plunkett said.
“On the second day of selling, buyer sentiment cooled slightly, resulting in the market losing some of the large gains enjoyed on the first.
“The MPGs fell by 23 to 99 cents,” he said.
“On the back of these losses the EMI dropped by 21 cents, with strong gains in the crossbreds preventing a larger fall.
“Despite the second day losses the EMI recorded an overall positive movement of 102 cents for the series, closing the week at 1219 cents/kg clean.”
Brokers passed in 4.7pc of the 25,383-bale offering
Mr Plunkett said as the finer microns have risen at a greater rate than the broader ones, the price differentials between microns have stretched
“In the first sale of the current season, the difference between the 18 micron MPGs and the 21 micron MPGs was 215 cents, but the difference between the 18.0 and 21.0 micron MPGs has now increased to 388 cents,” he said.
Mr Plunkett said che crossbred sector recorded the largest rises this week, with the 26 and 30 micron MPGs rising by 18pc.
“The 28 micron MPGs rose by 31pc.
“In the both the north and south, this was the largest weekly rise for the 28 micron MPG on record.”
Next week’s bales offering to test market strength
Next week’s national offering is currently rostered at 44,004 bales, which exceeds the 41,543 bales catalogued in Week 6 in early August this year.
Fox and Lillie brokerage manager Eamon Timms said the market was being driven by Chinese demand with a little bit of European interest.
“About 93-94pc of what is being bought now is for China, which is quite extraordinary – nowhere else is active at the moment.”
He said next week’s market would be challenged by the big bale offering, with China normally comfortable with 30-35,000 bales a week.
“More than that might be a bit of a stress on the system.”
Mr Timms said the rise in crossbred prices was coming over a fairly low base and would be challenged next week. Crossbred wool sold in New Zealand after the close of the Australian market “was significantly cheaper.”
Elders National Wool Selling Centre manager Simon Hogan said growers were attracted to sell with the recent rally in prices, with small amounts of wool “coming off hold.”
“But with the massive jump on Tuesday that’s just accelerated things.
“They (prices) obviously got to levels that were very attractive to an increased percentage of growers that have been holding wool.”
He said there were mixed views about next week’s market, with some analysts suggesting it could be better than expectations, while other are expecting it might come under pressure next week and be significantly cheaper.