News

Wool market finishes positively, but trends down

Sheep Central, April 1, 2022

AUSTRALIAN wool prices trended lower at auctions this week, recording an overall loss for the third consecutive sale series.

The Australian Wool Exchange said although the market retracted slightly, there were positive signs throughout the series, particularly on the final selling days in the three selling centres.

“The market opened cautiously and from the opening lot in the east through to the final hammer in the west the prices being achieved for good style Merino fleece types slowly but noticeably reduced, as buyers looked for value in the softening market.

“By the end of the first day, the price reductions were reflected in the individual Merino fleece Micron Price Guides (MPGs) which across the country fell by between 1 and 37 cents,” AWEX said.

Melbourne recorded the heaviest falls and these losses, combined with falls in all other sectors, pushed the AWEX Eastern Market Indicator (EMI) down by 14 cents for the day.

“The second day of selling there was an increase in buyer confidence and this in turn resulted in widespread spirited bidding, which helped to push prices generally higher for the day.

“The Merino fleece MPGs for 20 micron and finer rose by between 1 and 25 cents,” AWEX said.

“There were small losses in some other pockets of the market, but the increases were enough to push the market higher overall, the EMI added 4 cents for the day.

“On the final day, with only Melbourne in operation, the Merino fleece market continued to strengthen, the MPGs rebounded another 1 to 12 cents and the EMI managed the smallest of increases, again held back from a larger rise by selected weak pockets in the market,” AWEX said.

By the end of the series, the EMI had fallen by 9 cents, closing the week at 1375c/kg clean. Brokers passed in 13.1 percent of the 44,772 bales offered.

Bidding interest positive by week’s end – AWI

Australian Wool Innovation trade consultant Scott Carmody said turbulent pricing featured throughout Australian wool auctions this week, but by the close of selling, negligible changes had been registered on the week to week comparison.

“Most wool types and descriptions finished lower, but within 5 to 10 cents of the established basis.

“In Western Australia, however; most Merino price indicators added 5 to 10 cents to the values of last week,” he said.

Mr Carmody said foreign exchange rates behaved more sedately this week, the exception being the Euro which strengthened against the Australian dollar.

“Most commodity linked currencies (such as the A$) weakened 1.5 percent against the Euro as crude oil prices fell after news of the USA planning to place vast parts of their strategic oil reserves onto the market.

“Other significant news this week included a larger than expected decrease in Chinese manufacturing activity,” he said.

Mr Carmody said despite the gains on most of the individual Merino micron price guides in Fremantle, the Western Market Indicator (WMI) still dropped 6 cents to 1418c/kg clean. Nationally, 86.9pc of all wool offered managed to find a buyer.

Mr Carmody said the first day of auctions this week produced negative price results across the type spectrum.

“Losses of up to 40 cents occurred as buyers cautiously and carefully approached purchasing, as they quickly identified that local traders would be bearing the brunt of financing this week’s auction transaction costs.

“The off-shore based buyers started the week off abnormally quiet, with the exception of the crossbred wool type purchasing indent from China,” he said.

“With local buyers being willing to keep on buying early in the week, the final two days saw offshore interests first stabilise the market then inevitably push prices up to finish the week positively.”

Next week’s national offering increases. There are currently 49,206 bales on offer in Sydney, Fremantle and Melbourne, which will accommodate the offering over two selling days, Tuesday and Wednesday.

Click here to see the latest AWEX Micron Price Guides.

Sources: AWEX, AWI.

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