AUSTRALIAN wool prices continued their downward trend at auctions earlier this week, but improved on the last day of sales.
After a 23-cent slide in the AWEX Eastern Market Indicator on the first day of selling, Australian Wool Innovation said better trade opportunities from China, India and Italy reportedly developed late Wednesday.
“Those encouraging signs were immediately transferred into the sale rooms on Thursday with a handy 20c/kg recovery in prices, and almost eliminating the losses of the previous day,” AWI said.
The AWEX Eastern Market Indicator closed the week on 1558c/kg clean, down 14 cents, with 10 percent of the 45,838 bales passed in nationally.
The EMI in $US terms was down nine cents to US1231c/kg, with the $A-US exchange rate up US0.10 cents to US79.01 cents.
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Market opens with 25-50 cent discounts for 18-23 microns
AWEX senior market analyst Lionel Plunkett said prices were quickly discounted when the Sydney and Melbourne markets opened. The 18-23 micron wools experienced general losses of 25-50 cents, with lesser style and spec lots again posting the biggest falls.
“The best style and strength lots in the 17 micron and finer range managed to record small gains; however, this did little to halt the fall of the EMI, which closed at 1549 cents, 23 cents lower than the previous sale.”
Mr Plunkett said the Western region had to come into line with the eastern states’ markets, after its one-week break, and this resulted in losses of 90 to 120 cents when compared to the previous Fremantle sale.
“The market trend was reversed on the second day and the market started to record positive movements.
“Gains were realised across all microns, with the entire merino spectrum selling at levels 10 to 20 cents above those achieved on the previous day.”
Mr Plunkett said the skirting market suffered further falls this week and prices were generally reduced by 20 to 30 cents.
“Wools carrying more than 3pc vegetable matter continued to be the most affected as buyers favoured the FNF types.”
The crossbred sector also suffered losses on both days, with general reductions of 15 to 30 cents for the 25-32 micron wools. The oddment market continued to fall with most types and descriptions dropping 15 to 20 cents, Mr Plunkett said.
Superfine premiums in Sydney
AWI said the current price levels are 18pc higher in $A and 24pc higher in $US terms, compared to the wool values being paid at the same period last spring.
AWI said significant premiums were paid in the designated superfine wool sale in Sydney this week.
“In the individual micron categories of 18.5 micron and finer, it was commonplace for prices to be at least two dollars per kg above that of their top making styled counterparts.
“The truest of the spinners’ types fared even better, with three to four dollar per kg premiums being paid.”
AWI said while Chinese and trader interests provided some healthy competition, the Italian interests exercised their buying strength and bought almost the entire selection, apart from the odd lot or two.
“It appears that Chinese wool interests are well and truly intent on bringing back the premium to traditional super fine wools.
“The buying patterns emanating out of that country and indeed other wool-processing nations, appear to be strengthening as more mills are setting their sights on filling their supply chains whilst the good volumes of wool are coming onto the market.”
AWI said although there have been some weaker periods in the market in the last six months, in almost all instances, the weakness lasts just a week or two at best.
“Following surges in the market we seem to be experiencing a short lull, then a swift retreat and then a steady recovery which inevitably places the market average price above that of the previous surge.
“Exactly when this trend changes is unknown and now likely dependent on the willingness of the consumer to keep buying wool at retail,” AWI said.
Next week, the size of the national offering reduces slightly, with currently 42,872 rostered for sale in Sydney, Melbourne and Fremantle.
“Sales concluded strongly this week, so hopefully that is a good insight as to the fortunes on next weeks’ activity,” AWI said.