Wool Market Reports

Superfine wool prices hold up as dollar strengthens

Sheep Central, December 1, 2023

AUSTRALIAN wool prices eased this week, heavily influenced by currency movements, but underpinned by better superfine prices and Chinese demand.

The Australian Wool Exchange said after 5.7 percent of the auction offering was withdrawn prior to sales, the large offering forecast last week did not eventuate.

Brokers instead offered 46,908 bales, 3220 more bales than the previous week.

AWEX said after five months of the new season has been completed, the total amount of wool put through the auction system is tracking well above that of the previous season.

“There have been 62,672 more bales offered in the 2023/24 season, an increase of 8.5p[c.

“The movements in the individual Micron Price Guides (MPGs) for Merino fleece across the country ranged between plus 26 cents clean (17.0-micron MPG in Melbourne) to minus 41 cents clean (both the 18.5 and the 20.0-micron MPGs in Fremantle),” AWEX said.

“With the other three sectors all losing ground, the AWEX Eastern Market Indicator dropped by 4 cents for the week, closing at 1166 cents/kg clean.”

AWEX said due to a strengthening of the Australian dollar — the AUD gained nearly a full cent compared to the USD — when viewed in USD terms the EMI recorded an overall increase.

“The EMI added 8 US cents for the week, closing at 776 US cents.”

AWEX said with the total amount offered now well above the previous year, the total dollar amount of wool has now surpassed the corresponding sale of the previous season.

“There has been 971 million dollars’ worth of wool sold, an increase of 7 million year on year.

“Interestingly, while Melbourne and Fremantle have increased their dollar amounts (plus 9 million and plus 11 million dollars respectively), Sydney has lost ground (minus 13 million) highlighting the larger falls that the finer Merino microns have experienced this year, thus more heavily impacting Sydney’s large superfine selection,” AWEX said.

Chinese orders compete on stylish Merino lines – AWI

Australian Wool Innovation trade consultant Scott Carmody said this week’s market results at Australian wool auctions as well and truly determined by currency and a slight back off in prompt demand.

“The AUD shifted 1.5pc higher against its leading forex pair used in wool trading – the US dollar.

“Despite this negative factor the eastern states indicator lost just 0.3pc of value, but in the west 2ps lower values in the predominant Merino selection painted the softer demand picture that arose following the bullish previous couple of weeks,” he said.

Mr Carmody said superfine Merino types finer than 18 micron helped maintain the overall market with prices a general 20 cents dearer.

“The better specified and more stylish wools were 40/50 cents dearer at times, with the surprising activity of two or three Chinese orders competing against – and often outbidding -the normally dominant Euro orders.

“These positive results were countered though with the broader than 18 micron wools falling away throughout selling by 25 cents,” he said.

“The larger falls occurred in Melbourne where volumes on offer were much greater.

“The WA market, which was almost entirely 18.5 to 20.5micron wools, was a consistent 40ac cheaper across the type and micron spectrum,” Mr Carmody said.

Mr Carmody said Australia’s largest trading house dominated purchasing this week.

“Good support came from the top three Chinese top maker representatives whom were progressively keener as prices drifted backward.

“The indents from both China and India were rather subdued, particularly from China whom had been setting the higher price levels daily for the past two weeks,” he said.

Mr Carmody said problems continue at Australian wharves.

“One of the country’s largest ports operators (accounting for 40pc of movements) came under a cyber incident earlier this month which forced it to suspend operations for three days.

“Subsequent strike action and rolling stoppages by workers at this same company have also interfered with normal operations,” he said.

“This has impacted container shipping of wool and thus payments to exporters suffering delays whom negotiate letters of credit to a bill of lading date.”

Next week 47,917 bales are expected to be nationally from Tuesday to Thursday as Melbourne sells over three days. This is the penultimate selling week of the 2023 calendar year before the annual Summer recess.

Sources – AWEX, AWI.

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