WOOL prices consolidated downward in Australian auctions this week, although helped by renewed top maker interest.
AWEX senior market analyst Lionel Plunkett said after three weeks of successive rises the Australian wool market recorded overall losses this week.
“Melbourne opened proceedings on Tuesday and was the only centre in operation.
“The softer tone evident at the end of the previous week’s sale was immediately apparent, when selling began,” he said.
“By day’s end, the individual Micron Price Guides (MPGs) for 17 micron and coarser had fallen by 14 to 40 cents.
“On the back of these falls, the AWEX Eastern Market Indicator lost 14 cents for the day.”
As the northern region did not sell on the last selling day of the previous series, or the first selling day of this series, the centre did not suffer the losses experienced in the other centres on these days, Mr Plunkett said.
“As a result, Sydney posted large losses on its opening day, with these falls pushing the Sydney MPGs down by 37 to 110 cents.
“The Sydney losses were the driving force behind the 24-cent drop in the EMI, as the southern region was firm when compared to the previous day, shaving only one cent of the Melbourne indicator.”
Mr Plunkett said the market settled on the final selling day as buyers found a price basis they were comfortable with.
“The market then slowly rose as the sale progressed, so much so that the Fremantle region selling last recorded increases of 6 to 16 cents for the day, finishing the week on a positive note, with the EMI managed a 5-cent increase for the day.”
Overall, the EMI lost 33 cents for the week, closing at 1576c/kg clean. Brokers passed in 15.9pc of the 52,666 bales offered, with the EMI in $US closing down US30 cents at 1082c/kg.
Oddment sector was strongest
Mr Plunkett said the oddment sector was the strongest performer for the series.
“Locks in particular were in strong demand, pushing prices up by 30 to 40 cents.
“These gains combined with modest increases in other carding types, helped push three carding indicators up by an average of 30 cents.”
Traders dominate buying with top maker interest
Australian Wool Innovation trade consultant Scott Carmody said price fluctuations this week were largely due to centres aligning themselves price-wise as two consecutive days of Sydney not selling with Melbourne had wild differences in levels which needed adjustment. But a softer tone was generally in play as buyers looked for more comfortable levels of trade, he said.
Mr Carmody said the drop in the US EMI should help extract more interest from overseas users.
“The final day of selling produced a noticeable consolidation.
“Confidence was somewhat restored as a more stable and consistent pricing scenario had re-entered the marketplace,” he said.
“All wool types were very firm to 10ac dearer, with most attention drawn back to the Merino fleece sector of 19 micron and broader.”
Mr Carmody said buying was again dominated by the local Australian-based traders, with the largest operator continuing confidently all week to follow last week’s strong purchasing numbers.
“Of most significance though was an increase in top maker interest as prices retreated towards more pre- Christmas levels.
“This was Chinese as well as European first-stage processor interest.”
Trade should note passed-in rates
Mr Carmody said the continuing historically higher passed-in rates showed grower sellers are steadfast in setting a level at which they require to move their product through the pipeline.
“Some trade attention should be taken from this, as growers are probably in the best position to judge the upcoming prompt and mid-term supply of wool, or perceived lack thereof.”
Next week’s national offering reduces to 40,680 bales. Due to Monday being a public holiday in Australia, sales will only be held two days on Wednesday and Thursday. China is also basically on shut down for a week to celebrate their lunar New Year.
Sources – AWEX, AWI.