Wool prices dip from historical peak as buyers discount on quality

Sheep Central, May 4, 2018

CROSSBRED wool values were hardest hit by price corrections influenced by quality and the offering at Australian auction sales this week.

AWEX senior market analyst Lionel Plunkett said although the Australian wool market recorded solid gains in the previous sale, toward the end of the week a softer tone was evident.

“The weaker buyer sentiment carried forward into Week 44 and that combined with detrimental currency movement has contributed to pushing the market into negative territory.

“The selection again consisted of many lower yielding, poorer style wools, and these types continued to be discounted as buyers again struggled to average them into their purchases,” he said.

“The largest price reductions were felt in the Northern region, which posted average falls of 15 to 25 cents, compared to small positive and negative movements in the Southern region. T

“The overall result, was 10-cent fall in the benchmark Eastern Market Indicator, which closed the week at 1836 cents,” he said.

“Interestingly, in a reverse of what transpired in the previous week, the tone turned positive by the end of the sale.

“So much so, that the Western region recorded gains of 15 to 30 cents for the day, pushing the Western indicator up by a healthy 13 cents on Thursday.”

Mr Plunkett said the skirting market had a steady selling week and not much movement was recorded, although there was strong buyer interest in wools carrying less than 3 percent vegetable matter and those possessing excellent additional measurement results.

“These lots sold at levels above those achieved at the previous sale.”

Mr Plunkett said after being the best performing sector in recent weeks, crossbred wools recorded losses for the first time in five weeks.

“The broadest microns were hardest hit, with 30 micron dropping by 35 cents and 32 micron falling 10 to 20 cents.

“There were minimal movements in the oddments, the exception being in the Western region, the corrections felt there brought prices back into alignment with the Eastern markets.”

Australian Wool Innovation’s weekly market report said in what is becoming a developing pattern, the local market drifted backwards in concert with a strengthening US dollar, “defying traditional logical thinking, as the stronger $US should theoretically act as a stimulant and push $A prices upward.”

“Conversely we have also seen the reverse occurring, giving rise to the evidence of the underlying strength of demand at present for the fibre as the leading factor in wool price determination.

“The EMI when expressed in US dollars was harder hit and dropped 17 cents to close at 1381usc clean kg.“

There are currently 38,292 bales rostered to be offered next week.

Sources: AWI, AWEX.


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