Wool Market Reports

Speculators bid up in exchange rate-driven wool auctions

Sheep Central January 17, 2025

INTENSE exchange rate-driven competition at wool auctions this week included some new though likely speculative overseas demand, according to Australian Wool Innovation.

The Australian Wool Exchange said after returning from the annual three-week Christmas recess, the market made a very positive start to the 2025 calendar year.

“Many industry observers predicted a strong opening, with these predictions based on the deterioration of the Australian dollar (AUD) over the Christmas recess.

“The AUD lost 1.36 cents compared to the US dollar (USD) since the previous sale on the18th of December,” AWEX said.

“With the majority of Australian wool traded in US dollars this was bound to have a direct impact on the market.

“These predictions were quickly realised as the market opened, with sharp rises across all Merino types and descriptions recorded,” AWEX said.

“The market quickly found an increased level, and then generally maintained it all the way to the final hammer in the western region.

“By the end of the first day, the individual Micron Price Guides for Merino fleece had risen by between 11 and 55 cents.

“The benchmark AWEX Eastern Market Indicator (EMI) added 34 cents — the largest daily rise in the EMI since February 2023 – and then rose by 44 cents.

“On the second day, the market quickly found the levels set on the previous day and generally maintained these price points until the end of the day, meaning the market recorded only small movements across the country.”

AWEX said this was reflected in the EMI which added just 2 cents for the day.

“The EMI finished the series at 1190 cents, a rise of 36 cents.”

ASWEEX said the EMI is now at its highest point since January last year.

“With currency playing such a large role in the market movements, when viewed in US dollar terms the rise in the EMI was less impressive, the EMI closed the week US7 cents higher at US737 cents.

Competition was intense – AWI

AWI trade consultant Scott Carmody said competition was intense from the outset and continued throughout most of the selling week.

“Currency conversion was the major factor at play with a near 2pc advantage to AUD pricing compared to the foreign exchange (forex) levels available when sales closed in December.

“Exporters had reported pre-sale of some steady, yet not game changing, new demand from overseas users,” Mr Carmody said.

“This enquiry was apparent throughout much of the recess in sales.

“A lot of this new business was likely somewhat speculative on the back of an AU dollar that had fallen at some times to 3.5pc lower against the US dollar,” he said.

Mr Carmody said all Merino prices appreciated by a general 40-60 cents/kg clean for the week.

“Similar to pre-recess, some individual sale lots displaying better specifications spiked upwards by as much as 100 cents.

“Crossbred wool types were also dearer and well sought and a 15ac gain was registered and cardings gained 25 cents.”

Mr Carmody said buying was dominated by the three largest Chinese top makers, as well as Australia’s largest domestic trading companies covering off some risk of new sales made.

“A slight re-assessment by sale room operators was undertaken just prior to the conclusion of selling as higher than expected auction volumes for next week became known to the buying trade and allowed some purchasing pressure to be released.”

Next week’s national offering is forecast to rise and there is expected to be 48,930 bales on offer in Sydney, Melbourne and Fremantle.

Sources – AWEX, AWI.

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