Wool Market Reports

Strong Chinese competition drives wool market higher

Sheep Central, December 15, 2023

HEATED competition between Chinese interests pushed the Australian auction wool market higher in the final sales for 2023.

The Australian Wool Exchange said the market has closed out the 2023 calendar year strongly, recording a second successive weekly increase.

“On the first day of selling buyer competition was strong, pushing prices progressively higher for the day,” AWEX said.

“The standouts for the day were the Merino fleece types, the individual Micron Price Guides (MPGs) for 16.5 through to 21 micron rose by between 11 and 92 cents.

“The AWEX Eastern Market Indicator (EMI) gained 21 cents for the day,” AWEX said.

“This was the largest daily rise in the EMI since the 5th of July, where a 21-cent rise was also recorded.

“In USD terms, the US20-cent rise was the largest daily rise in the EMI since the 14th of December last year,” AWEX said.

“The second day was almost a carbon copy of the first, with further large increases in fine Merino fleece types – with the highlight a 104-cent rise in the 16.5 micron MPG in Melbourne — helping to push the EMI up by another 19 cents.

“The market finished softly on the final day, in a stand-alone Melbourne offering,” AWEX said.

AWEX said the EMI gave back 5 cents of the previous days rises and closed the week and the year at 1212 cents/kg clean, a weekly increase of 35 cents.

“Due to gains in the Australian dollar, when viewed in USD terms the gain in the EMI was greater, 44 US cents,” AWEX said.

“The EMI opened the year at 1327 cents and over the following twelve months it made gains and losses, but ultimately trended lower, closing the year 115 cents lower, an 8.7 percent fall.”

Auction sales will now have the annual three-week Christmas recess. Sales will resume in Week 28 (week beginning Monday, 8 January).

With wool accumulating during the break, this is traditionally one of the larger sales on the calendar, last year over 50,000 bales were offered, AWEX said.

Heated competition between Chinese interests – AWI

Australian Wool Innovation trade consultant Scott Carmody said the strength of competition continued strongly from last week into this week and only grew exponentially as the sales progressed.

“Animated bidding is perhaps an understatement, as buyers representing mainly Chinese interest clashed heatedly, with only very minor support coming from other using nations.

“The lack of the usual European and Indian purchasing has been highly visible,” Mr Carmody said.

“Many of the better super fine Merino clips continue to be loaded onto vessels bound for China.”

Mr Carmody said estimates of up to 25pc less wool being bought for both Europe and India have been foreshadowed by the official ABS (Australian Bureau of Statistics) data of export destinations of Australian wool for the three months since July.

“With the lower prices on offer earlier in the season, this also places the value of those exports to Italy and India at more than 40pc less Australian dollar value year-to-year in the same period.”

Mr Carmody said the only downside for the week’s extraordinary sale room activity was the slight reduction on the final day at Melbourne that sold alone and saw small retractions of 5-10 cents from the highs of the preceding two days trade.

“Some incredible individual price gains were made during the week, with all Merino wools finer than 17.5 micron recording gains over 100 cents, and much more when some individual lots are analysed.

“All other Merino wools were 30 to 50 cents dearer for the week.”

Mr Carmody said while the AUD values put on a very large 3pc general gain for the week, the result in both USD and Chinese yuan was staggering.

“Both of the indicators shot up to be near 6pc higher by the close of selling.

“This will be the basis of trade for basically the next month as sales are now in recess for three weeks,” he said.

“This price will be subject only to the ever seemingly unpredictable value of the AUD against those currencies which will be the only opportunity for price change to CIF values, and of course stock clearing and speculative trading.”

Click here to read the latest AWEX Micron Price Guides.

Sources – AWEX, AWI.

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