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Strong European demand on fine Merino wool lifts Australian market

Sheep Central, September 3, 2018

Merino wool in a sale sample. Picture – AWEX.

AUSTRALIAN wool prices last week recovered some of previous week’s losses with the help of strong European demand for quality fine Merino wool lines.

The AWEX Eastern Market Indicator rose 22 cents to 2090c/kg clean, with brokers passing in 2.7 percent of the offering of 35,988 bales, 6297 more than the previous week.

Australian Wool Innovation’s weekly market report said the biggest movers this week were the better Merino types bound for Europe and most descriptions finer than 19 micron.

“Quotes were a general 35 to 50 cents higher for the week, whilst the Merino wools broader than 19 micron gained 5 to 10 cents.

“The most action though was for carding wool types of all descriptions, which were exceptionally well sought,” AWI said.

AWEX quoted the EMI in US$ as down 3 cents to US1516c/kg clean, with the A-US exchange rate at US72.52 cents.

Melbourne warehouse fire postpones wool sale

AWEX senior market analyst Lionel Plunkett said an exclusion zone around the large warehouse fire in Tottenham last week resulted in a postponement of Melbourne’s Thursday sale to Friday.

“It was one of only three Friday sales in the history of AWEX (since 1995) and the first postponement of a sale since the 9-11 New York terrorist attacks in 2001.”

Mr Plunkett said the market increased progressively over the series, resulting in rises of 10 to 50 cents for Merino types on the east coast.

“The movements for Fremantle showed losses approaching one dollar for the 20/21-micron range; however, this was compared to its previous sale held a fortnight earlier.”

Mr Plunkett said a designated Australian Superfine sale in Sydney this week was timely given a focus on the finer microns, and significant premiums were paid for spinners’ styles and higher strength types in the ultrafine range.

“Merino skirtings were similarly in high demand, particularly the well-classed better types exhibiting low vegetable matter content and good length.”

Well-classed crossbred clips firm 10 cents

Mr Plunkett said prices firm by around 10 cents over the three days of selling for the smallest crossbred catalogue for the season.

Merino carding types added to recent gains, with further rises last week, he said.

“Improvements of 40 to 60 cents pushed all three Merino Carding Indicators into record territory, beating the previous benchmark made in January.”

Forex changes benefit European buyers

AWI said the EMI when expressed in US$ was nullified almost fully by the impact of the movement of the US$ v A$ forex or foreign exchange rate, with the USEMI depreciating.

“The major adjustment this week from an overseas user’s perspective was again the changes in Euro levels.

“This currency moved another 1.18% lower against the AUD and follows on from the almost 3pc fall last week,” AWI said.

“This has given some handy price advantages over the past fortnight to the European buyers, which has been opportune as the selection of types suitable for that market has started to become more prevalent in volume at auction.”

AWI said the clips in Sydney’s superfine sale from the New England, Goulburn/Yass districts of NSW with the odd South East Queensland clip were exemplary in quality, considering the drought conditions through most of the growing year.

“The strength, style and crimp definition of most of these wools finer than 19 micron were of the highest standard and the growers should be proud of what they achieved in the most trying of circumstances.

“Needless to say that most of the best examples of superfine wools ended up being purchased by the Italian connections and are bound for the high fashion houses of Europe and beyond,” AWI said.

“What was most pleasing though for local woolgrower sellers was the extremely good premium pricing of anywhere between 100 and 350c/kg clean above the market of general run of the mill types.”

Falling wool supply situation becoming clearer

AWI said the falling wool supply at auction is becoming a little clearer as the season progresses.

“Anecdotal accounts of the lowering of the Australian wool offered at auction have some estimates ranging from 5pc to over 10pc.

“The extent of these numbers appear to be now plausible as the first six sale weeks of the new season have seen just 218,448 bales sold to the trade in comparison with 252,527 bales sold last year at the same time,” AWI said.

“This figure of 34,079 bales less sent to processing machinery this season represents a comparative shortfall of 13.5pc so far in Australian wool, but it must be remembered that a higher than normal volume was seen at the same period last year which may be exaggerating that year on year comparison.”

Next week, 39,293 bales are expected in the three selling centres nationally.

“The A$ prices continue to be strong but just a slight slowing on the USD levels could signal a week of relative calmness before many within the industry trade representatives head to China for the 30th Annual Nanjing Wool Market conference in the week commencing 10th September,” AWI said.

Sources: AWI, AWEX.

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