Trade

Wool prices at five-month high

Terry Sim, October 10, 2014

Australia’s main wool market indicator this week punched through the 1050-cent level for the first time in five months, AWEX reported today.

The AWEX Eastern Market Indicator finished the week on 1051c/kg, after an increase of eight cents on Wednesday and a five cent rise on Thursday.

Sellers passed in 6.1 percent of the 40,893-bale offering in Fremantle, Sydney and Melbourne, with the Australian dollar at US88.80 cents and the EMI in US cents at 933, a lift of 19 cents.

Forward market activity indicates confidence

Landmark’s wool risk manager Anthony Boatman said forward markets this week saw good bidding and trade at similar levels to spot prices right through to the end of this year, indicating good buyer confidence for the remainder of the spring.

AWEX senior market analyst Lionel Plunkett said the consecutive rises over both selling days this week capped off a mini-rally in the AWEX-EMI over five selling days.

“The pattern for both days was reasonably similar, starting off on a firm footing before gathering momentum over the course of the auction,” he said.

Gains of up to 25 cents for some microns

Mr Plunkett said increases of 10 to 15 cents were fairly common for most microns, resulting in a net gain of 25 cents for a number of micron price guides.

“Low mid-break types continued to attract the attention of buyers and sold to healthy premiums.

“However, it was support for the lower spec types which gave out some promising signals,” he said.

Renewed interest in mid-break wools

Mr Plunkett said there was widening interest in the low mid-break wools which extended into part-tender and tender types; support which had been lacking only a fortnight ago.

“In general the lower spec types crept up and narrowed the gap to the better types, although there were still odd lots which showed some discounting.

“The only exception to an otherwise positive week was a soft finish late on Thursday.”

Mr Plunkett said the east coast sales in Yennora and Melbourne had generally closed 5 to 10 cents dearer for the day, however a late-starting Fremantle gave up some ground and closed five cents lower.

“Merino skirtings firmed on the back of support for best length/low vegetable matter types.

“Crossbreds steadied this week after their recent advance, closing within a few cents of the previous sale,” he said.

Carding types found good support, sending the Merino Carding Indicators around 10 cents higher.

Similar market expected next week

Techwool Trading managing director Rod Franklin said most exporters were now beginning to get their averages (for orders), plus some clients are starting to accept slightly higher mid-breaks.

“A lot of it depends on what the offering comes up like.

“If we have a week where the average mid-break is extremely high then I think those high mid-break wools will become weaker again.”

He said the high mid-break wools were mainly in the coarser microns now and they are still suffering.

“The higher mid-break wools 19.5 microns and finer have definitely improved as we (exporters) get our averages.

“I’m expecting a similar sort of market next week over everything really – I can’t see much reason for change.”

Support from China, India and western Europe

Mr Franklin said most market inquiry is coming from China with support from India and a little bit from western Europe.

He said crossbreds appear to be directly related to Australian-US exchange rate and a drop in the currency mid-week helped these wools.

Mr Franklin said the wool market was still “a little bit shaky” and Techwool Trading customers were fairly reluctant to accept higher offers on wool.

“I can’t see the market dearer in the next week or over the next couple of weeks.

“I don’t think it will come off at all, but probably not much change.”

Strong competition for fine wool in Sydney

Landmark wool risk manager Anthony Boatman said fine wool offered in Sydney enjoyed strong competition this week, pushing most categories 18.5 and finer about 20 cents higher.

“The medium micron selection also sold well, generally with gains in the range of 10-15 cents.

“The gap has diminished between the high and low midbreaks, with good support across all types,” he said.

“Crossbreds continued to find support, and generally maintained their values over both sale days. “Oddments also lifted over both sales, generally up to around five cents each day.”

Fine wools continued to attract buyer during Thursday with 8 1PP certified lots helping to keep the market firmer, he said.

Medium microns made further price improvements, ranging from 5-15 cents.

Stylish fine wool sought in Melbourne

In Melbourne on Wednesday, the market opened well and improved throughout until the close.

“The relatively stylish selection of fine wools on offer were well-sought after, with increases posted in the range of 15-25 cents.

“Medium wools increased their values by 10-15 cents,” he said.

Mr Boatman said crossbred wool sold at mostly unchanged levels, while oddments gained 5-10 cents.

Melbourne prices progressively improved again on Thursday, with 17.5 and finer microns lifting 5-10 cents and medium wools picking up another 5-15 cents. Oddments also made good gains, ranging from 5-10 cents and crossbred fleece again sold at generally unchanged levels.

Solid increases in medium microns in Fremantle

In Fremantle there were solid increases for the medium micron categories, with gains of between 15-20 cents, Mr Boatman said.

“Fine wools were more subdued, with gains of 5-10 cents posted on low volumes.”

Oddments sold very well, lifting around 10 cents on limited volume.

On Thursday in Fremantle, some of the gains were wiped out, with prices backing off by 5-10 cents across the 18 to 22 micron categories on offer, Mr Boatman said.

“However, support was maintained by the better style and strength lots however.”

Oddments also enjoyed continued support, picking up a further 5-10 cents, he said.

Bale offering looks set to rise

Mr Plunket said if the latest estimate of 50,304 bales listed for next week’s sales proves correct it will be the largest offering in eight months.

Mr Boatman said the supply of wool in auctions has also improved in the first two weeks of October, lifting more than five percent compared to last year.

“This is in contrast to last month, which saw almost a 12pc reduction year-on-year.”

Sources: AWEX, Landmark, Techwool Trading.

HAVE YOUR SAY

Your email address will not be published.

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

Get Sheep Central's news headlines emailed to you -
FREE!