Supply, demand and dollars gets Australian wool market through first post-Brexit sales

Sheep Central, July 1, 2016

Wool sales Landmark1 MelbourneAUSTRALIA’S wool market has weathered its first post-Brexit sales this week, with medium Merino micron price guides lifting 15-50 cents, and especially in the Fremantle sale.

The benchmark AWEX Eastern market indicator gained 12 cents to 1297c/kg clean, with brokers passing in 7.2 percent of the 28,865-bale offering

AWEX senior market analyst Lionel Plunkett said it was a strong finish to the 2015/16 wool selling season with the AWEX EMI at a level only exceeded twice before over the past 12 months and just shy of the season-high of 1304c/kg.

It was the second highest season-closing level on record, though for the smallest three-centre sale since August this year. The EMI in $US terms finished down 2 cents on US965 cents with the $A-$US exchange rate down 0.82 cents on US74.39 cents.

“It was a similar pattern to last week with the overall market spurred on by strong support in the medium/broader micron ranges.

“The 19.5 to 23-microns rose in equal increments, climbing around 20 cents clean for the week,” he said.

“Although the finer microns also closed ahead, their results lagged their broader counterparts, firming by a more modest 5 to 10 cents clean.

“As with recent weeks the stylish 40nkt types continued to find good support in the superfine range.”

Mr Plunkett said the increase in Merino fleece prices came despite global uncertainty surrounding the British referendum result to leave the European Union – Brexit.

“The Australian dollar lost ground as traders looked for safe-haven currencies such as the US dollar.”

Merino skirtings maintained good competition and firmed slightly, Mr Plunkett said.

“Merino cardings also held firm for the week.

“Crossbreds had mixed results; recent support for the finer microns (25/26) persisted this week while the broader microns lost ground.”

Wool market a stand-out for calmness

The AWI weekly market report said in a generally tumultuous week of global financial turmoil, the Australian wool auction markets in Sydney, Melbourne and Fremantle proved a stand-out for their calm and considered reaction.

“The basic fundamentals of supply, demand and forex conversion remained the key ingredients to market direction, and any emotive reaction to Brexit was left at the door of auction rooms as the industry went about their business extremely professionally.

“Buyers, exporters and brokers saw the result in Britain for what it was and quickly analysed the potential impacts and hence the non-action required,” the report said.

The report said buyer confidence was unaffected, with prices and demand for all Merino fleece strengthening throughout the selling week.

“Remarkably, most participants approached the week with expectations of a strong market and this proved to be the case.

“The 38,000 bales on offer next week should sell to good advantage, although buyers can be slightly more selective given the larger two-week upcoming volume total,” the AWI report said.

“A strong finish to the 2015/16 season was witnessed and a strong start to the 2016/17 new season is expected in the two weeks of selling prior to the approaching three-week recess in selling at Australian wool auctions.”

Click here for the lates AWEX Micron Price Guides.

Sources: AWEX, AWI.


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