MERINO and crossbred wool prices improved in Australian auctions this week, after two successive weeks of falls.

The Australian Wool Exchange said the positive tone that was evident on the final selling day in the previous auction series, particularly in the west, that sold later in the day, has carried into this week.

“This positive tone has resulted in widespread spirited competition from buyers, which in turn has resulted in price increases across all Merino fleece types and descriptions.”

AWEX said the national quantity reduced slightly from last week, down 2116 bales to 39,972 bales available to the trade.

Sydney held a designated Superfine sale and on the first day of selling the individual Micron Price Guides (MPGs) rose by between 1 and 25 cents, AWEX said.

“Only the 17-micron MPG (unchanged) and the 16.5-micron MPG in the South (minus 11) resisted the trend.”

AWEX said the benchmark AWEX Eastern Market Indicator added 5 cents for the day.

“The second selling day was an almost carbon copy of the first, with further rises recorded across all Merino types and descriptions.

“The MPG movements in the fleece sector across the country, ranged between unchanged and plus 28 cents and the EMI rose by 6 cents for the day,” AWEX said.

The EMI closed the week 11 cents higher at 1195 cents/kg clean.

Minimal currency movement meant that the EMI also rose in US dollar terms, the EMI finished the series 2 US cents higher, closing at US756 cents, AWEX said.

“The EMI has recorded three consecutive rises in both AUD and USD terms.

“The last time this occurred was back in October last year.”

AWEX said the skirting market had a volatile week, recording general losses on the first day, only to quickly bounce back, recovering the losses and finishing the week generally unchanged. The oddment sector had a solid week.

“The prices on offer were all generally at or above those on offer in the previous series. Next week the national offering is expected to fall.”

Supply chain confidence returning – AWI

Australian Wool Innovation trade consultant Scott Carmody said the top three exporter traders were key to this week’s strong opening.

“New forward contracts were again written, allowing for disposal of any held wool, and creating forward book positions not seen for some time.

“Reports had the overseas users following the price upward as the spot prices improved locally,” he said.

“Chinese business dominated, with just smatterings of interest from other global destinations for Australian wool.”

Mr Carmody said the usual dispersal of wool through the first two months of each calendar year has largely been undertaken.

“The weekly auction volumes are forecast to be well under 40,000 bales for the foreseeable future.

“Grower-held wool in store is the only available source of any additions to the fresh shorn clips coming onto the sale show floors.”

He said many of those held wools would most likely be offered only when substantial higher values are seen in the market.

“The make-up of the current selection has been more diverse than usual.

“Drought conditions continue across many of our wool growing regions which will see a continuation of the lowering of staple strength (nkt) , vegetable matter (vm) content and yields,” Mr Carmody said.

“The buyer’s confidence in further selling opportunities from an expected rapid decline in supply is rising.

“The wool auction markets largely rely upon a good dose of confidence through the entire supply chain,” he said.

Mr Carmody said that a semblance of confidence appears to be returning, with many of the overseas trade and mills reportedly having stemmed the losses of the past few years from old stocks and their books are now returning to balanced.

“Focus is now set upon new opportunities in wool and hopefully see a return to profitability in what is believed to be an improving global economy.”

There are currently 34,697 bales listed for sale next week.

Sources – AWEX, AWI.