RELUCTANT growers seemed to have squeezed a lift out of the Australian wool market, with prices lifting this week after an eight-week run of losses.
The Australian Wool Exchange said the longest run of weekly losses since 2003 ended with overall positive movement, to open the 2023/24 selling season strongly.
Australian Wool Innovation trade consultant Scott Carmody attributed the strong market to supply.
“Forward sellers, had been well and truly betting on between 100,000 and 110,000 bales being offered for the final two sales pre the mid-year recess.
“This has been the case for many a season and most operators has not foreseen any reason to jump into the market to complete commitments prior to the two weeks of the July auctions, which would allow completion of their July shipments and allow focus to turn towards August contractual arrangements,” he said.
“Local sellers’ resistance to the low prices being offered for the past two months forced this figure down to just 80,000 bales to be offered in the two weeks of July.
“Much of the wool held back was Merino,” he said.
“This placed pressure on exporters, manufacturers and indents from overseas for their prompt delivery requirements.
“A swift reassessment in strategy from participants saw all return to full activity simultaneously and the resultant dearer market,” he said.
AWEX said the poor market conditions over the previous two months discouraged many sellers form the market and what is normally one of the larger sales of the season ended up being only 36,175 bales.
“This was 12,685 bales less than week 1 of the previous year.”
Brokers passed in just 6.4 percent of the bales offered this week.
AWEX said the market opened with increases across all Merino fleece types and descriptions and continued to slowly strengthen as the sale progressed.
“The Individual Micron Price Guides (MPGs) for Merino fleece in Sydney and Melbourne gained between 3 and 44 cents for the first day.
“In Fremantle, which was selling last, the increases were larger, the western fleece MPGs added between 21 and 49 cents and the AWEX Eastern Market Indicator (EMI) added 14 cents for the day.”
AWEX said the gains seen late in the day in the west were quickly realised when the markets opened in the east on day two, and from there the market continued to climb.
Across the country the MPGs added between another 1 and 51 cents, and the EMI climbed by a further 21 cents, closing the week 36 cents higher at 1162 cents/kg clean.
“This was the first weekly rise in the EMI since the 3rd of May and the largest weekly rise in the EMI since the 9th of February, when the EMI gained 44 cents for the week.
“All other sectors of the markets recorded positive movements, the only exceptions were an unchanged Southern 30-micron MPG and the carding indicator also in the south,” AWEX said.
Mr Carmody said small gains were also extracted from buyers’ pockets on the crossbred wools and carding segments that contributed to the healthiest sale week for sellers in two months.
Buying was keener from India and Europe on some types – AWI
“On the demand side, some small re-ignition of enquiry was evident and the prices available on the smallish volume of new business conducted during the week were noticeably better.
“The buying from India and Europe was also more evident and somewhat keener on the better specified lots,” he said.
“Most overseas users were faced with forward offer prices more than 4pc dearer, so strong indents were placed into the auction, hoping for better spot buy in levels.
“Chinese top makers remained firmly at the or near the top of buyers lists, but it was the stronger buying from exporters that created the ascending wool value scenario,” he said.
Next week is the final sale before the annual mid-year three-week recess. This is the last selling opportunity at auction until August. Currently, there are expected to be 44,452 bales on offer.
Click here to see the latest AWEX Micron Price Guides.
Sources – AWEX, AWI.