Wool Market Reports

Wool growers hold as demand softens with larger offerings

Terry Sim, March 19, 2021

AUSTRALIAN wool brokers passed in more clips this week as finance issues and softer demand contributed to a general weakening in wool prices at national auctions.

The Australian Wool Exchange reported that after weeks of small movements, the market tracked downward this week, with nearly all sectors of the market suffering losses.

“Wool on hold continues to bolster offerings.

“Compared to the previous season, there has been 63,349 more bales put through the auction system, which is 5.6 percent more than the corresponding sale of the previous season,” AWEX said.

“Good style fleece (MF3/4/5) particularly those with good additional measurement results, received strong buyer support and was least affected by the falling market.

“The Merino fleece Micron Price Guides (MPGs) across the country fell by between 17 and 82 cents.”

AWEX said the losses in these MPGs, combined with losses in the skirting, crossbred and oddment sectors, pushed the AWEX Eastern Market Indicator (EMI) down by 32 cents, to close the week at 1277c/kg clean, a fall of 2.4pc.

“The drop in prices was met with seller resistance, pushing the passed-in rate up across the country.

“By the end of the series 16.9pc was passed in, this was an increase of 7.6pc compared to the previous series.”

AWEX said due to further strengthening of the Australian dollar, when viewed in US dollar terms, the fall in the EMI was lower. The EMI dropped US14 cents, closing at US1004c/kg, a 1.4pc reduction.

“Currency movement has had a large effect on the market over the previous 12 months.

“When viewed in A$ the EMI has fallen 161 cents, an 11.2pc reduction,” AWEX said.

“However, when viewed in US$ terms, the EMI has gained 199 cents, a solid 24.9pc increase.”

AWEX said skirtings followed a similar path to the fleece, with general losses of between 30 and 50 cents, which in percentage terms was a similar fall to the fleece.

Price falls were expected – AWI

Australian Wool Innovation trade consultant Scott Carmody said this week’s price falls had largely been expected for the past few weeks.

“The pressure that has been building around buyers’ access to finance amidst larger than normal offerings for this time of the year came to a head.”

Mr Carmody said risk-averse purchasing matching softer demand finally took over from the cautious money-management by buyers that had led to the previous seven sale weeks remaining remarkably stable, after a string of strong gains since the New Year.

“Shipping issues are primarily responsible for holding up exporters’ funds to allow further spending.

“Vessel bookings made in advance are often now subject to trans-shipments being added at the last moment, rather than the direct sailings originally booked,” he said.

“This can add a week or two to delivery time, which hampers exporters’ funds, as many letters of credit (LCs) are negotiable upon arrival at the overseas ports.

“LCs with a bill of lading (BL) redemption are also being held back as port congestion and vessel delay delivery,” Mr Carmody said.

Mr Carmody said traders and top makers were again the dominant buyers, although the market did see different buyers in and out of the market at various times.

“This allowed the market reductions to occur.”

Next week’s national offering has lowered, due in part to the weaker market, and there are currently 46,578 bales on offer in Sydney, Fremantle and Melbourne.

Click here to see the latest AWEX Micron Price Guides.


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