AUSTRALIAN wool growers refused to sell almost a third of the bales offered at auction this week, as the market suffered a large correction in the first sale series since a three-week recess.
AWEX senior market analyst Lionel Plunkett said concerns over global trade tensions, resulted in many major buyers being very cautious in their purchases.
“This tentative buying approach made it difficult for the market to find a firm level, meaning prices were continually discounted as the series progressed.”
One analyst reported that carding and non-mulesed wools held or increased value, but the benchmark AWEX Eastern Market Indicator fell 78 cents to 1676c/kg and in US$ terms the EMI was US87 cents lower at US1135 cents, with the A-US dollar exchange rate at US67.74 cents.
Mr Plunkett said the auctions in Sydney, Melbourne and Fremantle this week were the first buying and selling opportunities since early July. The national weekly offering was 43,063 bales, 7774 more bales than in the last sale series before the recess.
Brokers passed in 28.6pc of the offering, the highest pass-in rate in more than 10 years, preventing the market from falling further than it did, Mr Plunkett said.
“With three sales now completed in the 2019/20 selling season, the total national offering has fallen by 27,533 bales when compared to the previous season, a reduction of 20.6pc,” Mr Plunkett said.
“From the opening lot in the eastern markets, it was immediately apparent that buyers were not prepared to buy at the levels achieved before the recess.
“Prices opened 50 to 60 cents lower but by the end of the series the individual Micron Price Guides (MPGs) had generally fallen by 80 to 180 cents,” he said.
“The Western region sold last and recorded the largest falls.”
Mr Plunkett said after starting the new season solidly, where the EMI gained 39 cents, this week’s drop in the indicator has pushed the market into negative territory for the 2019/20 season.
“The EMI has fallen 234 cents for the calendar year and is 440 cents below the high it achieved in August last year, an overall reduction of 20.7pc.”
Mr Plunkett said the oddments were the only sector to record positive movement for the week.
“A limited supply attracted very strong competition, pushing prices up by 50 to 70 cents.
“This was reflected in the regional carding indicators, which rose by an average of 51 cents.”