AUSTRALIA’S wool market hit its lowest point since January 2021 this week, with Merino fleece under 19 micron the most affected.

The Australian Wool Exchange said the AWEX Eastern Market Indicator lost ground on both selling days this week, making it eight consecutive selling days of losses.

“Falling nine cents for the week, the EMI is now at 1232 cents a kilogram, its lowest level since January 2021,” AWEX said.

“Positive economic data gave a boost to the Australian dollar which rose 2.68 cents week-on-week and converted the 9-cent loss in AUD terms to a 27 cent rise on a USD basis.

“As with previous weeks, most support for Merino types was concentrated in the broader microns.”

AWEX said 19.5 micron and broader fleece prices were generally higher for the week,/ with some sharp rises shown on the final day.

“The finer microns were the main drivers of the lower EMI with the Micron Price Guides averaging a 30 cent loss and sending the 17-MPG to a near 2-year low.”

AWEX said the weekly MPG movements masked a more nuanced market, with the better types showing more resilience, particularly low CVh lots (<50) as they become increasingly scarce (lowest level since Jan). Merino Skirtings tracked a similar line to the fleece with the finer microns losing ground the broader edge finding support. Crossbreds had mixed results but were generally in line with the previous sale. Merino Cardings fell 10 to 15 cents. Volumes are expected to rise to just over 36,000 bales at three centres next week.><50) as they become increasingly scarce (lowest level since Jan).

Merino Skirtings tracked a similar line to the fleece with the finer microns losing ground the broader edge finding support, AWEX said.

“Crossbreds had mixed results, but were generally in line with the previous sale.

“Merino Cardings fell 10 to 15 cents,” AWEX said.

Volumes are expected to rise to just over 36,000 bales at three centres next week.

Indian and European buyers were influential – AWI

AWI trade consultant Scott Carmody said the substantially weaker US dollar (USD) against the Australian dollar (AUD) had most buyers expecting a sharply lower market this week at Australian wool auctions, but this was far from the outcome.

“The local prices held on exceptionally well, perhaps highlighting the current buying strength from regions outside the US-dollar-using powerhouse of China,” he said.

“The Indian and European purchasing contribution continues to be influential considering the relatively low volumes/supply on offer for this time of the selling season.”

Mr Carmody said as prices remained firm on the AUD basis, demand from China did eventuate, with some clients choosing to lift the US20/25 cents required to match the market price.

“This offshore buying was again sporadic but local exporters were trading warily, so some enquiry did appear to go unfulfilled.

“This action was not surprising as the local buyers and exporters were not wanting to be caught in a short position during a time when the market was going against not only expectations but against standard economic logic,” he said.

Mr Carmody said the finest Merino wools at less than 19 micron the most affected, the price gaps continue to concertina down toward the broader type price levels.

“A general 25-cent lower price was offered for the wools in that super fine wool sector.

“Conversely, all sale lots of Merino broader than 19 micron achieved better prices all week.”

In addition, a strong push at the close of selling saw these wools finish the sales 25 cents dearer and under strong competition, and best comp seen for a month of auctions,” he said.

“Buying within the Merino fleece sector was dominated by traders, as the forex rates appeared to take the purchasing impetus away from the China indents and China top maker buying.

“First stage processor buying was more apparent in the Merino skirting and also the crossbred wool offering, but the cardings sector was commanded by these manufacturers.”

Mr Carmody said a looming logistics issue may impact upon wool markets as Australia’s largest tugboat operator announced an intention to lockout port workers this Friday.

“If in place, no shipping vessels will be towed in or out of 17 Australian ports serviced by this company which will cause significant delays.

“Unfortunately, the container ports of Sydney, Melbourne and Fremantle are in that 17.”

Next week’s auction schedule has 35,000 bales to be offered on Tuesday and Wednesday.

Sources – AWI, AWEX.