MORE than a third of catalogued bales went unsold at auctions as Australian wool prices fell further this week.
Brokers withdrew 7.7 percent of catalogued bales before the sale and a further 27.7pc were passed-in during auctions.
The market’s main price benchmark, the Australian Wool Exchange Eastern Market Indicator, settled at 1214cents/kg clean, down 49 cents, the EMI’s largest weekly fall since August 2021.
AWEX said weaker buyer sentiment was evident from the opening lot in the east and this weaker sentiment resulted in less spirited bidding, with buyer enthusiasm waning as the sales progressed.
“The result was prices opening lower, then deteriorating throughout the series.
“By the end of the week, the Individual Micron Price Guides (MPGs) for Merino fleece had dropped by between 31 and 117 cents across the three selling centres, with all regions recording similar falls,” AWEX said.
“The skirtings followed a similar pattern to the fleece, with general losses of between 40 and 60 cents.
“The oddments again lacked support and the three Merino Carding indicators dropped by an average of 35 cents,” AWEX said.
AWEX said the crossbred sector also fell, although the losses were not as severe as in the other sectors.
“The EMI has lost 96 cents (7.3%) over the previous three weeks.
“Currency played little part in the losses felt this week,” AWEX said.
“When viewed in US dollar terms the EMI dropped by 39 cents, and the 4.6pc fall was only slightly larger than the 3.9pc fall in the EMI in Australian dollar terms.
“The sharp falls were understandably met with seller resistance, pushing the national passed-in rate up to 27.3pc, this was the highest passed in rate since August 2021,” AWEX said.
“The amount of wool withdrawn prior to sale also climbed.
“The 7.7pc withdrawn nationally was the largest since March.”
AWEX said the price reductions of the previous three weeks have not been a deterrent to many sellers, and next week’s offering increases. Currently, there are 47,041 bales expected to be offered nationally.
Market is lacking confidence – AWI
Australian Wool Innovation trade consultant Scott Carmody said the lower volumes at Australian wool auctions this week could not arrest the current downward trend.
“All types and descriptions on offer were affected and from the outset, buyers were apprehensive to fully participate causing prices to depreciate throughout selling.
“The Merino segment was mostly affected with crossbred wool and carding types not as impacted.”
Mr Carmody said confidence has been lacking the past few weeks.
“That direction feeds upon itself, accentuating the current “feel” buyers are getting.
“An obvious, clear direction from overseas trading partners is not forthcoming presently thus creating the reactionary price behaviour,” he said.
“The highlight from the week’s activity came from China’s largest top maker, who maintained – and in fact increased – its usual weekly percentage of purchases, particularly within the Merino fleece sector.
“The approach it has shown should incentivise others that maintenance of supply at the first stage is an essential ingredient to being a strong participant in that area of wool manufacturing.”
Mr Carmody said defying the current greasy wool auction results, apparel sales in the USA, Germany, South Korea, Italy and France continue to rebound and are well above 2022 levels and are also topping pre-COVID years.
“Unfortunately, our most traditional and voluminous suiting market in Japan is not.”
Mr Carmody said in China, retail garment sales have continued their strong rebound with both March and April 2023 sales well above the 2022 numbers and are now above pre-pandemic levels.
“This continued growth is vital to wools ongoing fortunes.”
Mr Carmody said despite the recent price degradation, the presence of a consistent demand is a promising longer term signal.
“Containers are still freely flowing to manufacturing destinations.
“This indicates that upstream users continue to recognize the value and benefits of our product but the spot price is struggling as a clearing of the backlog of the supply chain, particularly at greasy and wool top level, is undertaken,” he said.
Click here to read the latest AWEX Micron Price Guides.
Sources – AWEX, AWI.
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