IMPROVED global business conditions has helped push Australia’s wool market to its highest level in six months.
The Australian Wool Exchange said the market has spiked upward this week, after a steady start to the 2023 calendar year.
The AWEX-Eastern Market Indicator moved to 1400 cent/kg clean; its highest level since the first week of this season (July), with brokers passing in just 5.7 percent of the 49,234-bale offering, AWEX said.
“The firming nature of last week enticed more sellers to an already busy time on the selling programme, pushing the national offering to just over 49,000 bales; the fourth largest for the season and almost 11,000 bales (10,808) more than the previous sale.
“This large offering came under intense buying pressure from the opening lots on the first selling day in the eastern centres when the market continued to strengthen, all the way to the closing lot in the west,” AWEX said.
“By the end of the day the rise in prices was reflected in the individual Micron Price Guides (MPGs) which for Merino fleece had risen by between 26 and 97 cents.
“These increases combined with overall rises in the other sectors pushed the AWEX Eastern Market Indicator (EMI) up by 44 cents for the day,” AWEX said.
“This was the largest daily increase in the EMI since October 2021.”
AWEX said it was a mixed market on Wednesday with both losses and gains recorded.
“Melbourne attracted the most interest with gains of 20 cents in the finer micron ranges.”
The crossbred sector had a strong day with gains of around 10 cents being common, AWEX said.
“The final day of selling saw only Melbourne in operation and the market struggled for momentum on the back of a firmer Australian dollar.
“Merino types were 5 cents cheaper while crossbreds firmed 5 cents”
AWEX said 21 micron wools recorded some of the largest gains this week and are now at their highest level in three years.
“Sellers appear to be encouraged by the rising market with almost 59,000 bales forecast for next week which will be the biggest sale since March 2020.”
Heavy enquiry from all destinations – AWI
Australian Wool Innovation trade consultant Scott Carmody said heavy enquiry from all wool destinations was converted into new business.
“Volumes written were substantial, types wanted were from across the spectrum and price levels available were at spot.
“The subsequent auction activity was consistently strong with just the slightest of pullback apparent at the close of selling at the standalone Melbourne sale on Thursday,” he said.
Mr Carmody said all buyers expected the market was set to rise considerably given the change to sentiment and the new business conditions permitting such a rise to be accommodated.
“The AUD v USD forex rate dropped by 2pc at the start of the selling and this just accentuated expectations and the subsequent wool value gains.
“Most contracts had been written at the ruling rate range of 0.7050 to 0.7090 range,” he said.
“A large majority of this week’s interest came from the sub-continent and European buyers.
“The better specified types were the most obviously sought after.”
Mr Carmody said many individual grower-lots achieved 100c/kg clean increases on last week’s values and in some cases upward of 200 cents.
“This was for mostly the spinners and best top making style clips.
“After a relatively sedate few months, the Italian competition and purchasing was “back to normal” as they were practically unbeatable on all those better wools,” he said.
Mr Carmody said Chinese interest remained in play and heightened as the forex went to their favour.
“It was noted though that the ability by the PRC-based wool interests to buy any sort of volume diminished rapidly as the AUD auction prices rose above their ideal bid prices being placed in front of traders and exporters.
“Indents from China and Chinese first stage manufacturers was evident but in many cases they were outbid by other destinations in volumes above and beyond the 80% of our clip they usually accumulate,” he said.
“By the end of the week, a general 60 to 70 cents was added to all Merino types.
“A cumulative gain in this sector of over 100 cents has been posted in just two weeks,” he said.
Click here to see the latest AWEX Micron Price Guides.
Sources – AWEX, AWI.
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