Merino fleece prices were the most-affected by lower auction prices this week. Image – AWEX.

WOOL prices dipped further at auctions this week, with Merino fleece types the most affected, despite buyer-friendly currency movements.

The Australian Wool Exchange said after opening the 2023/24 wool selling season with two weeks of gains, the Australian wool market has fallen for the second consecutive series.

“It was expected be a reasonably large sale and the 46,367 bales on offer was very close to the forecast figure.

“Although the wool on offer received good buyer support, the prices on offer were consistently below those achieved during last week’s auctions,” AWEX said.

“The largest falls were felt in Merino fleece types, with the losses felt across all types and descriptions.

“Across the three selling centres, the individual Micron Price Guides (MPGs) for Merino fleece dropped by between 6 and 61 cents for the series, with only the 16.5-micron MPG in the north resisting the trend, posting a three-cent gain,” AWEX said.

“The Merino skirtings followed a similar path to the fleece, while the crossbred sector recorded very little change.

“The three Merino Carding Indicators (MC) fell by an average of 10 cents,” AWEX said.

The net result was a 13-cent drop in the AWEX Eastern Market Indicator to 1163 cents/kg clean.

AWEX said currency continues to play a large role in market movements.

“Although the loss in the EMI was minimal (1.1 percent in AUD terms), a 1.11-cent drop in the AUD compared to the US meant that when viewed in USD terms the EMI lost 21 cents, a 2.7pc fall.”

AWEX said due to this being a quieter time of year for shearing in Western Australia, lack of quantity dictates that there is no need for a sale next week (Week 8) in Fremantle. With only Melbourne and Sydney in operation the national quantity is expected to drop to 39,962 bales, selling on Tuesday and Wednesday.

Week 8 is also host to Wool Week, an important time on the wool industry calendar, with a range of events scheduled, mainly on Thursday, giving stakeholders across all sectors of the industry a chance to interact.

Logistics playing a bigger role – AWI

Australian Wool Innovation trade consultant Scott Carmody said this week’s Australian wool auctions played out on a similar pattern to what happened last week, with the notable difference a stronger close to the Fremantle market.

“This was perhaps due to there being no WA auction next week to allow for travel for meetings in Melbourne next week as part of the annual wool week plus outstanding August orders needing completion.”

Mr Carmody said most types and descriptions on offer sold 15-25 cents lower by the week’s end, with Western Australia less affected.

“Traders continue to be able to book some new orders – into China mainly – but prices have to be sharp to say the least.

“Quantities booked are seemingly being restricted to just one or two of the major suppliers who can meet the price levels being bid within the shipment time given,” Mr Carmody said.

“Logistics now have a greater role in preferred supply arrangements with the major exporters, but price and quality remain key.”

Mr Carmody said the ever-weakening Australian dollar (AUD) against the US dollar continues to assist wool growers who are paid in AUD from the auction system.

“The export value though continues to decline, with around US20c/kg clean on average being eliminated from the gross wool export earnings for the past two weeks, negating the reasonably strong July result where the two sales held placed 43usc value to wool export value.”

Mr Carmody said the strong auction participation from the representatives of the major Chinese first manufacturers continued this week, but the top two local traders exercised significantly more buying power.

These two leading export buyers — TechWool Trading and Endeavour Wool Exports — took a fairly high percentage of all wool categories, with 33pc of Merino fleece, 44pc of skirtings, 27pc of crossbreds and 23pc of cardings being purchased.

Click here to see the latest AWEX Micron Price Guides.

Sources – AWEX, AWI.