The Australian wool market has recorded another overall fall in auctions this week, adding to the large losses experienced last week.

The Australian Wool Exchange said the bulk of the reductions were felt on the first day.

The movements in the Merino fleece Micron Price Guides (MPGs) ranged between plus 11 cents (18 micron in the west) to minus 31 cents (17.5 micron in the south).

“The benchmark AWEX Eastern Market Indicator dropped 12 cents for the day.

“This was the third successive daily double-digit fall in the EMI, losing 35 cents across these three sales,” AWEX said.

“The last time this occurred was back in June 2023, when the EMI had five successive double-digit falls.”

In a positive sign, Fremantle selling last in the day, posted a 3-cent rise in the western Indicator, driven by increases in the finer microns, AWEX said.

“This positive tone carried into the second selling day, resulting in price increases across all regional indicators.

“The EMI rose by 4 cents for the day.”

AWEX said the EMI finished the auction series 8 cents lower, closing at 1184 cents/kg clean.

“A recent trend has seen a reduction in the price differentials between microns.

“This has been a result of larger price increases in the medium/broad microns in positive series compared to the finer microns, combined with smaller losses in the same microns when the market has retracted,” AWEX said.

“This is best highlighted by comparing the difference between the 18.5 and 20.0 MPGs in the south.

“These two MPGs currently sit at 1484 cents and 1428 cents respectively, a difference of just 56 cents.”

AWEX said at the start of the calendar year the MPGs were 1529 cents and 1426 cents, a difference of 103 cents.

“At the start of the 2024/24 season (July 10th, 2024) the MPGs were 1502 cents and 1325 cents, a difference of 177 cents.”

New contracts reported at ‘extremely sharp’ pricing – AWI

Australian Wool Innovation trade consultant Scott Carmody said despite the slightly lower prices in Australian dollar terms this week, some better signals were flowing through to the trade.

“As the AUD continued its recovery against the major trading currencies, overseas users largely followed the US prices upwards and were prepared to pay the few extra US cents or Chinese yuan (CNY) per kg to stay in touch with the market.

“The activity of the Fremantle market was more an accurate reflection of that positivity as the Western Indicator gained a healthy 1.5pc in US dollar terms for the series,” he said.

“The pre-sale show floor talk among buyers centred around a larger forward availability of contracts from almost predominantly China.

“Many new contracts had been reported, but at an extremely sharp pricing basis to the advantage of the overseas buyers,” Mr Carmody said.

“On top of the already committed business slated into the February and March delivery periods, this puts the market’s immediate fortunes not just into the supply volume column, but also the wool type make up of that upcoming supply.”

Mr Carmody said superfine Merino wools finer than 18 micron continue to hold the overall price indicators back.

“Prices this week for those qualities dropped off a general 20-30c/kg clean, but for some lower specification types (largely the high CVH% sale lots) fell away 40 cents.

“Their broader Merino (>18micron) counterparts largely held ground against the adverse forex pressure, with some better quality lots in the 19-20 micron area in particular strengthening as the tougher season in many growing areas affects quality. “

Mr Carmody said February is traditionally a high-volume supply month of these super fine wools and this year has coincided with a very lacklustre demand scenario arising from the Italian markets.

“On top of this, dry/drought conditions in a few of our super fine growing regions has resulted in quality issues – mainly tensile strength- preventing some clips from taking their usual routes to processing in Italy.

“It was notable that this week though that the few best spinners clips on offer were receiving some large (200 cents-plus) premiums from the luxury weavers of Italy,” he said.

“The two largest Chinese top makers led the buying activity this week, with traders having to lift levels to compete later in the week.”

Next week there are currently 41,029 bales rostered nationally, with Sydney a designated Superfine sale.

Source – AWEX, AWI.