AUSTRALIA’S wool market has bounced back from the losses experienced at last week’s auctions, with improvements in Merino and crossbred wool prices.
The Australian Wool Exchange said there were anecdotal reports of many overseas orders being booked early in the week, and because of these sales the talk amongst the trade was of the market being dearer.
“On the opening day of selling this talk turned to fact as the market climbed higher.
“All Merino fleece types and descriptions enjoyed the rises as buyers scrambled to get meaningful quantity in the smaller than normal offering,” AWEX said.
“By the end of the day the individual Micron Price Guides (MPGs) across the country had risen by between 14 and 60 cents.
“On the back of these rises, the benchmark AWEX Eastern Market Indicator (EMI) added 29 cents for the day,” AWEX said.
“This was the largest daily rise in the EMI for the 2021/22 season so far and the highest since the 16th of June where the EMI climbed 1 cent higher.”
AWEX said the market settled on the second day of selling, with the prices achieved generally within 15 cents of those of the previous day.
“This was reflected in the regional MPGs, where the movements ranged between +15 and -16 cents.
“The southern indicator added 2 cents and the northern indicator dropped 3 cents, which resulted in the EMI finishing the day unchanged,” AWEX said.
“The EMI ended the week 29 cents higher, closing the series at 1361 cents.”
AWEX said the Merino skirtings followed a very similar path to the fleece for this series, with solid prices increases in line with the fleece recorded on the first day of selling, followed by a generally unchanged market on the second.
“The higher prices achieved this week have encouraged more sellers to the market, pushing the national offering up for next week.”
Remarkable prices for quality superfine Merino lots – AWI
Mr Carmody said significantly though, the $A gains this week came about as the A-US forex rates strengthened against all major currencies used in wool buying/trading.
“This is usually indicative of an underlying strength of demand emanating from off shore, rather than pushed from trader positions.
“As such, in US$ terms, the EMI gains were greater at 3pc and finished the week at US1005c/kg clean.”
Mr Carmody said grower sellers seemed to find the prices being offered this week far more amenable and resulted in a clearance rate of 90.9pc (79.6pc last week) of the Australian wool on offer.
“Compared to the same point in time of last season, there has been 21.8pc or 39,942 more bales sold to the trade.”
Mr Carmody said vastly improved demand and price-based decisions by growers, as well as the higher production levels have led to the expanding sold figure.
“Using the A$ EMI as a base, wool prices are now 58.6pc or over 500 cents higher than they were at the corresponding sale week last year.
“This was the week last year that the EMI bottomed out at 858 cents, when the pandemic influences on negative consumer purchasing behaviour peaked.”
Mr Carmody said while not topping buying lists by any means, European interest — distinct from the consistent buying of crossbreds by Europe’s largest top maker — was very influential in pushing prices higher.
“Some remarkably higher prices were paid for the few lots of sub-16 micron wool available.
“Gains of over 1200 cents were recorded for sub-15 micron lots and at least double that for the couple of lots finer than 14 micron,” he said.
“The European buying was apparent across most well-measured Merino sale lots suiting their more stringent specifications.”
Mr Carmody said auction purchasing this week remained dominated by volume by local traders and a large Chinese top maker, but all other buying sectors showed good purchase intent.
“For the first time in many months, the competition could be described as being widespread, but still sporadic by some destinations.”
There are currently 38,630 bales rostered for auctions in Sydney, Melbourne and Fremantle next week.
Sources: AWEX, AWI.