HIGHER fine Merino fleece prices in Melbourne were the highlight in a generally flat wool auction market in Australia this week, reflecting stronger demand for stylish, well-measured lots versus discounts for low-yielding, poorly measured lots.
Demand was dominated by Chinese orders, with limited competition from Europe, which combined with the generally lower-yielding selection, exchange rate pressure, significant crossbred fleece value drops and seller resistance to depress overall prices for most Australian wool offered this week.
With 15.5 percent of the listed catalogue being withdrawn before the one-day sale on Wednesday and brokers passing in 23.1pc of the 18,097 bales offered, the Australian Wool Exchange’s Eastern Market Indicator dropped nine cents to 1292c/kg clean.
Western Australian Merino wool prices fared worse, with their state’s indicator losing 14 cents to 1370c/kg clean as low-yield discounting in Melbourne flowed through to Fremantle.
Australian Wool Exchange senior market analyst Lionel Plunkett said a large reason for the EMI’s fall was that the gains in the southern Merino micron price guides, were offset by losses in the crossbred MPGs, which fell by 19 to 46 cents.
Crossbred wool prices in Melbourne also suffered significant losses, with the micron price guides for 26-32 micron fleece falling 19-46 cents.
Schneider Australia managing director By Tim Marwedel said in his weekly market report that with only 18,000 bales offered nationally, the market was relatively stable, but with low-yielding dusty wool types continuing to dominate the selection.
“Only 14,000 bales were eventually sold.
“The biggest issue was the strengthening value of the Australian dollar against the US currency since the previous auction,” he said.
Mr Marwedel said the AWEX EMI was 3.9 percent dearer in $US value on Wednesday. The $A-US exchange rate rose US2.81 cents to US64.09 cents, pushing the EMI in $US up 31 cents to US828c/kg clean.
Brokers encouraged to produce a limited offering
Late last month, AWEX’s National Auction Selling Committee recommended that brokers “be prudent and cognisant of market conditions when considering their offerings.”
Mr Plunkett this week said Week 42 was originally scheduled as an Easter recess week; however, a decision was made by AWEX’s National Auction Selling Committee to schedule a sale, to provide another selling opportunity for growers wanting or needing to sell.
“Brokers were encouraged to only offer wool from genuine motivated sellers, in an effort to keep the national offering down.
“This had the desired result,” he said.
“After 15.5pc of the offering was withdrawn prior to sale, the total number of bales on offer nationally, was only 18,097 bales, the smallest national weekly offering since June 2009.”
Mr Plunkett said due to the small number of lots on offer, only a one-day (Wednesday) sale was required.
He said the market opened solidly in the eastern centres with minimal price movements reported in early trade.
“As the sale progressed however, the market started to retract.
“So much so, that the Western region selling last, recorded losses in the individual Micron Price Guides (MPGs) for 20 micron and finer of between 21 and 44 cents.”
He said Melbourne managed to record mainly positive overall movement and the Southern MPGs in the 19 micron and finer range, gained between 1 and 16 cents for the series.
Mr Plunkett said the Northern MPGs fell across the board, with losses of 2-11 cents.
“Many sellers were either unwilling or unprepared to meet the market, across the country over 23pc of the offering failed to reach seller reserve.
“Many of these passed-in wools were lesser style lots, which continually lost buyer support,” he said.
Issues with low-yielding wools continue
Fox & Lillie brokerage manager Eamon Timms said the market did not have much trouble absorbing the smaller volume of wool, but there were still issues with the quantities of lower-yielding wool.
But the market was still having trouble averaging the lower-yielding wool into the batches, he said.
“So the discount on low-yielding wools continues to increase.”
The main buying competition came from China with very limited interest from other markets, and while demand is “so crimped”, the offering sizes in Australia remained an issue, he said.
“Of course, we still have yet to face the prospect of South Africa rejoining wool selling.
“It’s not clear yet whether they will come back in next week or not,” Mr Timms said.
“It’s being considered … by the sound of it they are not far away from transacting again, so we will continue this theme of more sellers than buyers.
“It puts more pressure on the buyers who are still there.”
Lower style lots dominate Sydney selection
Nutrien’s Melbourne auction report also acknowledged that brokers offered wool from producers willing to sell, as 15.5pc of the nominated offering was withdrawn prior to sale. The Sydney and Melbourne markets opened strongly before weakening as the day progressed. The Fremantle market took the lead from the Eastern states and suffered the greatest price falls. Just over 23pc of the 18,097 bales on offer were passed in and tended to be the poorer style wools which were discounted.
Nutrien said lower style lots (style 5 or worse) dominated the Sydney selection this week and prices for these lots eased up to 20 cents. Buyers sought out the limited quantity of best style lots with favourable additional measurements and this demand limited price movements across the Merino MPGs to 11 cents or less. Merino skirtings eased by 5 to 10 cents with finer lots (<18 micron) most affected. Sydney’s crossbred MPGs losses included 2 cents for 26 micron fleece and 8 cents for 29 micron lines. The oddment sector was mixed. The Northern Regional Indicator lost 8 cents to 1325c/kg clean and the Northern Merino Carding Indicator fell 5 cents to 886c/kg clean. The Sydney passed-in rate was 24.1pc.
Fine wool prices rise in Melbourne
Price rises occurred among the finer MPGs (<19.5 micron) in Melbourne with gains of up to 16 cents at the finer end of range. Broader MPGs lost up to 9 cents. The MPG price movements reflected the mix of lots on offer, with demand for stylish, well-measured lots tending to offset discounts applied to low-yielding, poorly measured lots. Finer Merino skirtings (<17.5 micron) gained up to 15 cents on the back of solid demand, with broader types unchanged. Large price falls, 19 to 46 cents, occurred in the crossbred sector, with poorly-prepared lots most affected. The oddment sector softened with locks falling by 30 cents. The Southern Regional Indicator lost 12 cents to close at 1270c/kg clean, while the Southern Merino Carding Indicator dropped 30 cents to 872c/kg clean. The Melbourne passed-in rate was 17.9pc.
Fremantle record largest losses
Nutrien said the Fremantle marked recorded the largest losses this week, with price falls between 21 and 44 cents across all MPGs except for the 21 micron MPG, which gained 2 cents. Finer Merino skirtings (<19 micron) gained 5 to 10 cents while broader lots remained at last week’s levels. A limited selection of oddments saw locks ease by 5 cents with other categories unchanged. The Western Regional Indicator lost 14 cents to 1370c/kg clean, while the Western Merino Carding Indicator was steady at 883c/kg clean, down 1 cent. The Fremantle pass-in rate was 30.9pc.
Next week’s national offering increases to 31,738 bales, with all three centres in operation on Tuesday and Wednesday.
Sources: AWEX, Fox & Lillie, Schneider Australia, Nutrien.