MERINO wool buyers increased discounts for lower quality wool at auctions this week, and with fewer clips of preferred length, strength and vegetable matter content available, the market’s benchmark indicator fell.
However, crossbred clips under 28 micron lifted 10-30c/kg, especially those that were better prepared.
AWEX senior Market analyst Lionel Plunkett said Merino wool prices were generally reduced by 40 to 80 cents.
“It was the wools carrying impurities and those exhibiting poor length and strength results, that were the hardest hit, in many cases over 100 cents cheaper.
“Inversely, wools with very low mid-breaks were highly sought after and sold at levels very similar to the previous sale.”
Mr Plunkett said the AWEX Eastern Market Indicator fell by 52 cents, closing the week at 1778c/kg clean.
Brokers passed in 10.8 percent of the 45,536-bale offering, 1386 fewer bales than last week. The EMI in $US fell 22 cents to US1393c/kg clean, with the $A valued at US78.32 cents, down 1.02 cents.
Mr Plunkett said the skirting market followed a similar trend to the fleece.
“Losses were felt right across the board, generally between 30 and 70 cents, wools with favourable length and strength results, or those carrying less than 3pc vegetable matter, least-affected.”
Mr Plunkett said the crossbred sector defied the trend of the Merinos and generally managed to record rises for the week. The 25-28 micron lines posted solid gains of between 10 and 30 cents, with the better prepared lines enjoying the largest price increases. He said the 30 micron and coarser wools sold at par to 5 cents easier.
“The oddment sector continued its downward trend.
“Locks, stains and crutchings experienced general reductions of 20 to 30 cents, which was reflected in the three carding indicators dropping by an average of 23 cents.
“A limited selection of lambs was highly irregular but tending cheaper,” Mr Plunkett said.
Australian Wool Network state manager Kelvin Shelley said the higher percentage of poorer quality Merino wool – with high mid-breaks and more seed and burr – affected prices this week. There was also discounting of shorter prematurely shorn wools – sometimes up to 150c/kg – although sound wool with low vegetable matter content above 65mm in length sold very well.
Brokers and exporters reported increased sales of passed-in wools later in the week and after auctions, indicating continuing strong underlying demand, but with at a new price level for poorer quality lines.
Australian Wool Innovations weekly market report said the Merino sector was most affected this week, as the market drifted daily and failed to find a solid base where buyers were comfortable to support in strength.
“Not all of the wool market was gloomy as some very positive results were recorded at the finer end of the comeback/crossbred offering.”
AWI said the way the market for Merino fleece behaved is normally indicative of a dormant underlying strength of demand, lying in wait for the establishment of a confidence level or peg in the market.
“Basically, it was the inferior measurements of sale lots that was responsible for most of the downturn.
“The better style and strength wools and those lots exhibiting the best test results held on far better, albeit a few cents lower and in limited supply.”
AWI said in the Merino segment, it is somewhat significant that the six-month and to a lesser extent the eight-month interval shorn clips are now attracting discounts as the market sells to a weaker tone and more growers have gone to this harvest method.
“Generally, it appears that a minimum of around 70mm greasy on the test data is needed as a minimum safety point to ensure giving Merino wool the best chance of obtaining full market price. Wool of worsted length remains optimal, AWI said.
AWI said there was only a small selection available of super fine and ultrafine (finer than 18 micron) Merino fleece this week and the few bales on offer of the better types held on and even managed to put a few cents on top of the established values.
“The fine and medium Merino fleece types (18 to 22 micron) was the market sector where most of the losses for the week occurred.
“Variable amounts resulted between centres but a general 50 to 60ac was eliminated from most buyers’ quotations.”
AWI said the higher values extracted in the previous week at the Melbourne centre completely reversed this week, and that centre became the best value for buyers.
“The larger quantity on offer in Melbourne exacerbated the falls as the exporters funds became limited and buyers became more selective in their purchasing.”
Merino skirtings and cardings were consistently weaker throughout selling. Skirtings fell to similar amounts as their fleece counterparts whilst cardings fell 25 to 30ac. The finer (less than 28 micron) crossbred wools were the best performing of all wool types and 20ac was gained. The broader (29 micron plus) wools sold well and to a largely firm unchanged selling pattern.
Currently, there is 43,894 bales on offer in Sydney, Melbourne and Fremantle.
“A similar test of demand and of buyer’s financial abilities as witnessed this week is expected to be the compelling factors determining the market direction once again,” AWI said.
Click here for the latest AWEX Micron Price Guides.
Sources: AWEX, AWN, AWI.