Wool auction markets dips under bale supply pressure

Sheep Central, February 24, 2023

Gippsland Elders district wool manager Madi Gallagher selling at the National Wool Auction room in Melbourne.

AUSTRALIA’S auction wool market laboured through another large offering this week, helped marginally by the withdrawal of 3.9 percent of catalogued bales.

The Australian Wool Exchange said the market this week recorded its second successive overall loss, although there were positive signs toward the end of the series. After 3.9% of the original offering was withdrawn prior to sale, the national total was not as large as initially forecast.

The 53,060 bales offered was 4136 bales fewer than last week, and 13pc was passed in by brokers, as the AWEX Eastern Market Indicator (EMI) fell by 10 cents to 1364c/kg clean.

“The total amount offered this season continues to track above the previous season,” AWEX said.

“There have been 24,176 more bales offered this season, an increase of 2.1pc.”

AWEX said the offering received solid buyer support for the duration of the series and the prices achieved didn’t fluctuate greatly.

“By the end of the series the movements in the individual Micron Price Guides (MPGs) varied within micron groups and centres.

“In the merino fleece the MPGs ranged between +7 and -39 cents, the largest falls were felt in Melbourne which recorded rises on the final selling day last week, when only Melbourne was in operation,” AWEX said.

“The crossbred selection attracted good widespread competition and was the best performing sector for the week, here the MPGs ranged between fully firm (no MPG movement) and +8 cents.

“Although there has been more wool offered this season, the total dollar amount of wool sold is currently slightly below the corresponding sale of last season, due in part to the lower prices being achieved.”

AWEX said there has so far been $1,557 million worth of wool sold, compared to $1,571 million at the corresponding sale last season, or $15 million less. The national offering continues to remain high, with another sale above 50,000-plys bales forecast next week.

Chinese top makers step in for opportunities

Australian Wool innovation trade consultant Scott Camody said pre-sale expectations were for a very firm to dearer market on the back of some steady enquiry ex China over the preceding weekend. This did not eventuate as all three selling centres opened on Tuesday to levels of between 5 and 20 cents lower.

“The large offerings again this week stifled the market from heading in the expected positive direction.

“The AUD v USD had also risen on Tuesday to a 100 points above where the new business had been written,” he said.

“By Thursday the forex had settled back to that low US68-cent level, but by then the sales had concluded with just Melbourne selling.

“Additionally, some rhetoric surfaced from the exporting fraternity talk around financing conditions and access to that finance becoming more costly and harder to come by than over the previous years,” Mr Carmody said.

“Some slower payments from overseas are being felt as this ties up money to re-enter the market to purchase further and compete normally at auction.

“All these factors contributed to the initial price weakness.”

Mr Carmody said as traders were extremely busy coping with executing substantial deliveries, trying to complete due contracts and constantly following erratic price setting factors for new business opportunities, the two largest Chinese top makers stepped up their buying rates in auction rooms.

“Their support of the market was strong as they took advantage of any holes appearing and made it more difficult for traders than what has been the case for the past three weeks.

“This no doubt assisted the stronger results that were recorded on the final two days of selling which basically saw a firm unchanged market with a strong push towards the close,” he said.

Mr Carmody said wool-selling growers revealed their intent as the falling price met with resistance, leading to the 13pc passed in rate.

Currently 53,200 bales are expected to be offered next week in Melbourne, Fremantle and Sydney. Sydney’s auction is a designated superfine sale on Wednesday and Thursday.

Click here for the latest AWEX Micron price Guides.

Sources – AWEX, AWI.


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