Markets

Wool price indicator finishes year at highest level since 1979

Sheep Central, December 18, 2015

wool bales dec15-14WOOL prices finished 2015 with Christmas cheer this week, with the AWEX Eastern Market Indicator closing up 14 cents to 1265c/kg clean — its highest calendar year close since 1979.

Brokers passed in 4.4 percent of the 42,434-bale offering in Sydney, Melbourne and Fremantle, as the Australian dollar fell 1.21 cents to US71.74 cents and the EMI in US dollars terms lost five cents to 908c/kg.

AWEX senior market analyst Lionel Plunkett said after a number of weeks where prices consolidated and made only minor fluctuations, this week concluded the year with a strong finish.

He said it was a convincing start to the sale on Wednesday when prices jumped 20 cents and selected areas were as much as 30 cents higher.

“Whilst the better types continued to receive good buyer support and posted healthy rises, it was the lower spec types which outperformed and carried the market higher.

“These types have struggled recently, but found renewed support and narrowed the price gap to the better types,” Mr Plunkett said.

“An unchanged EMI on Thursday gave a stable finish leading into the recess.

“However, there were variations underlying the headline number.”

He said a positive result in Sydney was balanced out by a subdued finish to the Melbourne market, where some lower spec types lost a few cents.

“Merino skirtings were consistently strong, finishing around 20 cents higher for the week.

“The largest crossbred offering in 12 months had mixed results with the range of microns recording both increases and decreases,” Mr Plunkett said.

The Merino Carding Indicators all closed higher for the sale after making a good start to the week.

Mr Plunkett said over the past 12 months, the AWEX-EMI finished 206 cents higher, a 19.5pc increase which was the largest yearly rise since 2007.

“The finish to the year was 108 cents lower than its June mid-year peak. However, the closing EMI of 1265c was the highest ever finish to a calendar year,” he said.

Standout performers were Merino fleece types

Australian Wool Innovation’s weekly wool market report said the standout performers this week were in the Merino fleece segment, with gains of 15-35c/kg clean kg under a tight supply situation.

Currency fluctuations once again proved problematic for traders, but the major trading tool, the AUD versus USD, at least went to the favour of the local market by the rate dipping by almost 1.5pc, the AWI report said.

“For the second consecutive week, the fixed Chinese renminbi, or yuan (CNY), traded at the outer extreme of the unofficial pegging allowances compared to the USD, which ultimately saw the EMI slightly cheaper in USD but dearer in CNY.”

AWI said the market was buoyed this week by a more upbeat tone from exporters whom were reporting good interest from China, India and a little European business.

“An influx of letters of credit since the start of December has aided in filling buyers coffers for purchasing, but for many, the invigoration of funds came a bit too late to alter their buying strategy significantly, particularly given the heavy holding costs over the three week recess, and the inability to ship prompt of any late purchases.”

AWI said Merino fleece of all qualities gained 20-30c/kg clean for the week, but a slight pullback of lesser types on the final day was the only negative, albeit insignificant enough to not alter the market quotes and likely due to container filling.

“All higher quality types forged ahead right through to the close as volumes of these wools reduce as the season progresses.”

Australian wool auction sales now go into a three week recess and will resume in the week commencing January 11 2016.

Sources: AWEX, AWI.

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