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Wool auction market starts 2022 on positive note

Sheep Central, January 14, 2022

AUSTRALIA’S wool auction market made a confident start to the season this week, with general increases in Merino and crossbred clip prices inspiring trade confidence.

The benchmark AWEX Eastern market Indicator rose 31 cents to 1389c/kg clean, its highest level in six months, AWEX said.

Following the trend of large post-recess offerings, brokers catalogued 43,739 bales, 2877 more than the last 2021 sale and the fourth largest for the season. Broker passed in 7.3 percent.

“Bigger quantities usually prove to be no barrier to the market in this opening sale with the market finishing the first week higher 9 times out of 10 when viewed over the previous decade.”

AWEX said the market was stronger from the outset, with solid demand for Merino types helping to push prices higher by 10 to 20 cents clean.

“This trend not only continued but gathered momentum over the following two sale days; Wednesday firmed by 20 cents, while the Melbourne-only sale on Thursday sale was as much as 50 cents dearer for some of the finer microns.

“Strong support for Merino Skirtings types was mainly focused on the low vegetable matter types (<5pc VM) which tracked a similar path to the fleece types,” AWEX said.

“Whilst the higher VM types also closed the week on the positive side of the ledger, interest in these types was more muted.”

AWEX said crossbred wools made modest gains each day to close 10 to 20 cents higher.

“All three Merino Carding Indicators (MC) recorded rises, predominately driven by solid increases in locks, particularly those carrying less than 2pc vegetable matter.”

Trade expects steady forward momentum

National Council of Wool Selling Brokers of Australia president Rowan Woods said some Merino wool were 50 cents dearer in Melbourne on Thursday, but crossbred wools of low value struggled.

“There were a lot of no bids for low value crossbred wool in Sydney.

“There is just too much of it available and if it has any fault at all, like high VM, there is no market for it,” he said.

“And of course the quantities are building of that, with more crossbreds and vegetable matter around.”

Mr Woods said the premiums for Responsible Wool Standard certified non-mulesed wool were more than 20pc.

“Having said that, this year is not the year to be trying to experiment with non-mulesing, with the fly wave and lack of shearers.”

Nevertheless, Mr Woods said the market for Merino wool was very encouraging, fully firm and dearer in nearly every micron category.

“It’s only those broader low value crossbreds that were on the nose a bit.

“I think there is a feeling in the market that we were expecting to see a spike in the market in the Spring that didn’t eventuate for many reasons – COVID would have been one.

“That is still on the cards and I think there is a fleeing amongst the trade that the market can continue this very steady momentum,” he said.

“A continuous steady upward trend would be nice for the foreseeable future.”

Strong exporter and European top maker interest

Australian Wool Innovation trade consultant Scott Carmody said from the outset of selling this week, buyers were intent on inventory rebuilding following on from the three-week break in sales.

“The local traders in particular were exuding confidence and this showed in the way they were absorbing relatively large volumes of wool at current and indeed, at the ensuing higher values, that eventuated due to the week’s auction competition.

“Support to the market was also evident from Chinese top-making and indent operators, but in most instances, those parties were simply out-muscled in bidding this week by local exporters,” he said.

“European top maker interest was strong upon the crossbred wool types, with a large majority of the better wools in that type sector heading that way.”

AWEX said another large sale offering is expected next week with just over 46,000 bales expected to be offered nationally in Sydney, Melbourne and Fremantle.

Click here to see the latest AWEX Micron Price Guides.

Source: AWEX and AWI.

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