Markets

Wool price fall blamed on stronger Aussie dollar, but demand remains strong

Sheep Central, September 9, 2016

Wool sales Landmark1 MelbourneWOOL prices eased this week, influenced by a stronger Australian dollar, but the main AWEX Eastern Market Indicator still finished above 1300 cents/kg clean.

The AWEX EMI closed 15 cents down on 1305c/kg clean, with brokers passing 7.6 percent of the 41,832-bale offering.

AWEX said the EMI in $US terms lifted US7 cents to 1002c/kg – a 15-month high — as the $A-US exchange rate rose 1.37 cents to 76.80 cents.

AWEX senior market analyst Lionel Plunkett said the wool market eased back for the first time in a month.

Mr Plunkett said the auction series commenced with a NZ-only catalogue on Tuesday — the first in seven months — which set the tone for the rest of the week.

“The more stylish types continued to maintain strong support and gained ground, but the few lower spec types eased back 10 cents,” he said.

Mr Plunkett said the Australian offering followed suit the next day with a similar pattern.

“Spinners and stylish 40-50 Newtons/kilotex types all found strong support and added 20 cents clean.

“Weakness was evident in part tender types, and also the broader microns, which all fell 20 cents.”

Although prices continued to ease, Thursday was generally more restrained, he said.

“Initially 10 to 20 cents cheaper, there was an improving tone over the day and most types finished only slightly lower.

“The exception was Fremantle, which finished ahead for the finer types but lost another 20 cents lower for the 21/22 micron range.”

Merino skirtings maintained reasonably consistent support and the losses were fairly modest, Mr Plunkett said. A fairly small selection of crossbreds had mixed results.

“The 25/26 microns continued to find favour and remained firm while the broader range of 28 to 32 lost further ground, as much as 50 cents on the very broad edge and continues their recent longer term decline.

“Merino cardings had a quiet week, drifting 5 to 10 cents for the sale.”

AWI says direct-to-mill prices better this week

Australian Wool Innovation’s weekly market report said while the majority of prices in $A were showing minor declines, when examined in $US and other buy-in currencies, the market actually improved in delivered-to-mill prices to all of our major using countries.

“This indicates that demand for all wool types remains strong.” AWI said.

“If the $A cooperates and falls away we could still yet see some good improvements in local prices.

“Conversely, if the dollar continues to push toward the US80-cent mark, the slight drift in the market is likely to continue.”

AWI said pre-sale expectations were ironically for a dearer market, but heading into Wednesday the higher forex rates soon turned those opinions to a completely opposing stance.

“At the opening of selling all sections were very cautious and initial waning of levels were recorded throughout the offerings.”

AWI said with about 38,000 bales on offer next week, demand is good, but the exchange rates of the day is still determining prices and trends.

“This factor will remain the key for as long as the hand to mouth operations stay in play throughout the wool world.

“A firm to stronger market is tipped as the $A is already showing signs of retreating at the end of this week.”

Sources: AWEX, AWI.

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