THE strengthening Australian dollar on currency markets has been blamed for the dip in the wool action market this week.

The Australian Wool Exchange said there were no large falls, with many pockets recording increases, particularly in the north.

“The movements in the individual Micron Price Guides (MPGs) for Merino fleece ranged between plus 13 and minus 29 cents.

“The crossbred sector recorded minimal changes (MPG movements between plus 2 and minus 5 cents), the skirtings generally tracked the fleece, while the oddments closed slightly higher,” AWEX said.

The AWEX Eastern Market Indicator fell by 5 cents for the series, closing at 1167 cents/kg clean. Brokers passed in 6 percent of the 40,055 bales offered.

“The EMI began the current season (beginning of July 2023) at 1126 cents.

“Over the seventy selling days that have since transpired, the EMI has risen on twenty-nine occasions, fallen on thirty-five and been unchanged on the other six,” AWEX said.

“With the EMI now sitting at 1167 cents, the net result of all these market movements, is an increase of 41 cents.

“Averaging this movement across the season, the EMI has risen by an average of 0.58 cents per selling day,” AWEX said.

“Although the increase is small, it shows the market is tracking marginally higher for the season.

“As mentioned earlier, much of the market movements for the series can be attributed to currency movement, so much so that when viewed in US dollar terms the market strengthened.”

AWEX said the EMI added US9 cents for the series, closing at US772 cents.

“The largest improvements for the season, have been in the broadest reported sector of the market.

“In the south, the 30 micron MPG has gained 57 cents for the season, a 20pc rise,” AWEX said.

“The 32 micron MPG has added 50 cents, again an increase of exactly 20pc.”

Wool demand witness encouraging – AWI

Australian Wool Innovation trade consultant Scott Carmody said while the market’s leading Australian dollar indicators concluded selling slightly down, the demand intensity witnessed at the start of sales was encouraging, as were the results when measured in US dollars.

“These have shown 1.1pc price gains in consecutive auction – more than 2pc for the fortnight — in US dollars.”

Mr Carmody said the market started off bullish in the Sydney and Fremantle selling centres, despite the ruling AUD forex rates against the USD being 1.6pc to the disadvantage of local AUD levels. Merino prices in particular saw returns improve to sellers in the order of 10 to 30 cents. Additionally, the crossbred and carding sectors showed handy gains of 5 to 10 cents, he said.

“The earlier commencing Sydney auction market was more heavily impacted as very aggressive buying from a single China buyer, who had largely sat out of the market for a few weeks, pushed prices higher from the outset.

“Some individual sale lots within the 19 to 21 micron range, sold 40/50ac higher than similar specified lots in Fremantle sold later that same day,” Mr Carmody said.

“Exporter traders had reported slightly better conditions to sell since the close of selling the previous week, but nowhere levels the market eventually tracked to.

“The much stronger AUD also began to stymie new business.”

Mr Carmody said as expected by most local sale room buyers, once all three selling centres operated, price levels all settled down and adjusted across regions to more resemble equitable values and the current selling opportunities.

“The risk cover that may have been sought the previous day, had obviously been met as buying operations were much more on the mellow side.

“Flowing into the solo Melbourne sale on Thursday, current demand for prompt orders had seemingly been filled, rosters for the following week were indicating 15pc more wool had been allocated and prices fell back,” he said.

“The erratic movements of this week again underline just how reactive the market is at the moment as the pipeline is understood to be quite shallow in stocks at almost all stages of the wool textile supply chain.

“Buying was again dominated by traders with direct buying China top makers getting back towards normal market share percentages,” Mr Carmody said.

Next week, the offering is forecast to increase by 5000 bales-plus to more than 45,000 bales over two days; Tuesday and Wednesday.

Click here for the latest AWEX Micron Price Guides.

Sources – AWEX and AWI.