Strong demand dampens exchange rate pressure on Australian wool prices

Sheep Central, June 8, 2018

AUSTRALIAN wool prices resisted exchange rate pressure to overall hold above the industry benchmark figure of 2000c/kg clean.

Despite price drops for mainly fine Merino and all crossbred lines, strong demand for 21-22 micron Merino fleece, the AWEX Eastern Market Indicator fell 16 cents to close at 2011c/kg.

Brokers passed in 3.6 percent of the 26,942 bales offered, 3497 fewer than last week.

AWEX senior market analyst Lionel Plunkett said after four weeks of continued large increases, the Australian wool market has cooled in Week 49, with the smallest offering of the season.

“Despite the smaller offering, a softer tone was evident from the outset.

“The losses were mainly felt in the finer microns, resulting in 19 micron and finer losing between 25 and 50 cents for the sale,” he said.

“A limited supply of 21.0 and coarser attracted very strong demand, pushing prices higher in this range, generally 5 to 15 cents.

“It could be argued, that the reduction in price was heavily influenced by currency movement,” he said.

This was reflected in the EMI pushing further into record territory when viewed in USD terms.

“The EMI in $US added 14 cents on Wednesday, hitting a new high of 1547 cents, despite losing 9 cents on Thursday, the $USEMI rose by 6 cents for the week.”

Mr Plunkett said the skirtings also suffered corrections, generally 20 to 40 cents, wools carrying less than 4.0% vegetable matter least affected.

The crossbred sector followed a similar path of the Merinos and experienced decreases, he said.

“The most affected were the 28 to 30 microns, dropping by 5 to 15 cents.

“Poorly prepared lines lost buyer support, and were hardest hit in the falling market.”

Mr Plunkett said a limited selection of cardings attracted strong demand.

“Most types and descriptions, sold at levels very close to those achieved at the previous sale, which was reflected in the two carding indicators rising by an average of 2 cents.

Quantities increase next week as Fremantle returns to the selling programme. Currently, there is 28,956 bales rostered for sale in Sydney, Melbourne and Fremantle.

Click here for the latest AWEX Micron Price Guides.

Source: AWEX.


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