Markets

Wool demand strengthens with Aust dollar exchange rate

Sheep Central, March 29, 2016

Wool sales Landmark1 MelbourneRENEWED interested in Merino fleece helped lift wool prices last week despite the strengthening Australian-US dollar exchange rate.

AWEX senior market analyst Lionel Plunkett said national wool sales were held on Tuesday and Wednesday due to the Good Friday public holiday. More than 48,000 bales were initially expected, but 43,508 bales were offered to buyers.

The AWEX Eastern Market Indicator rose 12 cents to 1239c/kg clean, with 6.2 percent of the offering passed in. The Australian dollar strengthened during the week to US76.23 cents and the EMI in $US terms also rose 12 cents to US944c/kg.

“After a turnaround in sentiment last week, the market continued its rebound at this sale.

“The first day had started off reasonably tentative with prices up by 5 cents in Melbourne,” Mr Plunkett said.

“However Sydney, and a late selling Fremantle gave more optimistic signals when they finished as much as 15 cents dearer.”

On Wednesday, the Sydney market followed suit and another 10 to 20 cents was added to valuations, he said.

“Demand was fairly widespread with buyer support evident for the better types as well as those with lower specs, especially on the final day.

“The 12 cent rise in the AWEX-EMI was largely a result of that renewed support in the Merino Fleece sector with competition for the other catalogues less enthusiastic.”

Merino skirtings followed the trend higher, but the margins tended to be inconsistent and were in the order of 10 to 20 cents for the sale, Mr Plunkett said.

“Crossbreds struggled for traction and although there were some patches of improvement, on average prices finished slightly lower.”

Mr Plunkett said Merino cardings finished 5 to 10 cents higher on the back of steady support.

Australian Wool Innovation’s weekly market review said the renewed support showed genuine demand is behind the lift rather than just currency movements.

A feature of this week’s sales was the purpose-built auction facility at the Sydney Royal Easter Show, where the general public was able to see the sale in progress and a constant stream of people at the glass showed that people are more than a little interested in how wool is sold, AWI said.

“The pass-in rate for the week of just over 6pc reflects wool growers willingness to trade at the current levels but the yearly offering so far of 1.36 million bales is almost 8pc lower than the same time last year raising important questions about supply.”

The next wool sales will be held after the annual one-week Easter recess and will include a showcase auction at the IWTO conference in the Sydney CBD.

Click here for the latest AWEX Micron Price Guides.

Sources: AWEX, AWI.

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