SUPPLY concerns and strong demand for fewer high-yielding lines helped push wool prices to a near-record benchmark level this week.
Wool of all microns increased generally from 40-70c/kg clean, with highly sought fine crossbred fleece types in Melbourne lifting up to 130 cents.
AWEX senior market analyst Lionel Plunkett said the AWEX benchmark Eastern Market Indicator was pushed up by 49 cents to close the week at 1825c/kg clean, only nine cents shy of the record set in February.
Brokers passed in only 3.4 percent of the 39,605 bales offered, which was 14,804 bales fewer than last week. The EMI in $US dollars also increased 49 cents to US1425 cents with the $A-US exchange rate at US78.08 cents.
Mr Plunkett said the Australian Wool Market is heading into its traditional quiet period as Autumn shearing programs near completion and many farmers start to contemplate seeding.
“The slowdown in wool receivals, combined with the historically low amount of wool being held in brokers stores, has buyers concerned about securing quantity.
“These concerns have contributed to a high level of buyer demand,” he said.
“From the opening hammer this strong buyer sentiment was evident, pushing prices up across the entire Merino spectrum and across all types and descriptions.
“Levels slowly but noticeably rose across both selling days, as buyers continually attempted to secure their share of the smaller offering,” he said.
Mr Plunkett said as the season progresses, so too does the amount of low yielding wool coming on to the market.
“Wools yielding less than 65 percent dry made up over half of the national offering.
“Due to the prevalence of these types, buyers are finding it harder to average the lower yielding lots into their purchases, as a result the discounts being applied to these wools is continually increasing.”
Oddment and crossbred fleece prices rise
Mr Plunkett said the crossbred sector also experienced strong rises, with 26-32 micron lines selling at levels 40-60 cents above those achieved at the previous sale, and 25 micron lots were 60 to 130 cents dearer.
“The oddment market has risen for the fourth consecutive week.
“Prices generally rose by 20 to 60 cents pushing the three carding indicators up by an average of 31 cents,” he said.
“In the last month the three indicators have risen by an average of 108 cents.”
Next week quantities are expected to increase slightly and there are currently 43,648 bales rostered for sale in Sydney, Melbourne and Fremantle.
China leading buying as Indian demand wanes
Australian Wool Innovation’s said the EMI at 1825c/kg clean represented a 21pc increase from just one year ago, or $A3.13/kg clean higher.
“The theoretical effect of rising $A rates on the forex (foreign exchange) is usually deemed depreciative, but for the second week running, the opposite has occurred and by large margins.”
AWI said some uncharacteristic buying strategies have been witnessed in the sale rooms across Australia over the past few months.
“The local market just doesn’t seem to move upward any longer in margins indicative of the overseas pricing signals.
“Indeed, when the market does decide to move, it shoots well above any of the expected or sold at levels, but then inevitably succumbs to that price sensitivity and drifts backward,” AWI said.
“All this activity though is on an ever increasing trajectory, with this week’s levels generally approaching the record highs once again, and highest ever levels on some of the individual micron brackets.”
“Nearly all of the positive auction activity this week is thought to have stemmed from China, but sales into India were also thought to be active in the market,” AWI said.
“This is good news considering that the latest export figures to India are showing some of the lowest volumes recorded.
“Just 5pc of the clip is now being exported to India, just matching the percentage that is currently flowing to the Czech republic and Italy.”
AWI said for many years India has been a very important user of Australian wool and usually sits as the second largest buyer and manufacturing destination of our wool clip.
“The supply situation of Australian wool is now starting to become an increasingly unknown issue to buyers as the extended drought continues across almost all of the wool growing areas.
“Buyers are very aware and sympathetic to growers facing some of the worst climactic conditions seen for decades in parts,” AWI said.
“Combined with the ever more popular accelerated shearing (6 and 8 month) these factors are complicating volume and wool quality forecasts.”
With about 43,000 bales scheduled to sell next week, demand remained strong and Fremantle sold strongly through to the close which usually indicates a strong market continuing, AWI said.
Click here for the latest AWEX Micron Price Guides.
Call for Australian Fleece Competition entries
Entries are being received for the prestigious Australian Fleece Competition.
The competition is part of the annual Australian Sheep and Wool Show, to be held in Bendigo, Victoria, from July 20-22 this year.
The event is an opportunity for wool growers to showcase and benchmark their fleeces against the best in Australia, held in Bendigo each year. A range of fleeces from every wool-growing state and a wide range of breeds and diameters will be on display.
Organisers said the performance class will again be part of the competition to allow the benchmarking and display of fleeces shorn at 6-8 month intervals.
At the conclusion of the competition, exhibitors have the option to donate their fleeces to the national charity selected, The Lyme Disease Association of Australia. Thanks to the generosity of exhibitors, seventeen charities have shared in over $145,000 since the inception of the competition.
The closing date for entries to be received at the Brooklyn wool store is Friday June 1. Fleece bags are available on request. Fleeces can be entered online at www.sheepshow.com
For more information contact competition convenor Candice Cordy on 0408 963 109 or via email on [email protected]
Sources: AWEX, AWI.