Wool prices dip on quality as buyers look to next big offering

Sheep Central, November 6, 2015

wool bales dec15-14WOOL growers held back more wool this week as some buyers bought in anticipation of an increased offering – the largest offering in seven months — next week.

AWEX senior market analyst Lionel Plunkett said the AWEX Eastern Market Indicator’s 16-cent dip to 1234c/kg clean this week was fairly modest compared to the 81-cent rise over the previous fortnight.

The pass-in rate on the 41,286 bales offered this week, lifted by 11.9 percent to 14.6pc.

Mr Plunkett said the strengthening Australian dollar, up 0.44 US cents to US71.55 cents, weighed on the market. The EMI in US dollar terms fell 6 cents to US883 cents.

“The wool market fell on both days; a fall of 11 cents on Wednesday was followed by a 5-cent dip on Thursday,” he said.

“The medium/broad sector (18 through to 23) was generally 20 cents cheaper, but as much as 40 cents cheaper in Sydney.

“The superfine category (17 microns) fared somewhat better, easing by only 5 to 10 cents.”

Mr Plunkett said regardless of micron, the better types were the main focus for buyers, with heavy discounts applying to those types outside of order specifications, especially wools with a high CVH (coefficient of variation of hauteur).

“High POB, overlong, and low strength all contribute to a high CVH and these characteristics were similarly penalised.

“Volumes of wool with the sought-after CVH of less than 50 are close to seasonal lows and buyers are bidding up to secure the available quantity.”

In the other catalogues, Merino skirtings found good support during the sale and close at similar levels to the previous sale. Crossbreds eased by 10 to 15 cents, as did the Merino Carding Indicators, he said.

Buyers look for cheapening market

Australian Wool Innovation’s weekly wool market review said exporter competition was far more widespread this week and buyers showed a common desire to look for a cheapening market from the outset.

“One of the major buyers from last week was far less aggressive, so a more subdued tone in the sale rooms became apparent early on and that attitude stayed in play throughout,” the review said.

“The largest Chinese trading indent buyer remained keen to buy quantity and appeared daily near the top of buyers purchased bales lists across the country.

“Buyers were very selective in their purchasing and seemingly acted only on “need to complete“ contracts and indent orders.”

The stronger market of last week took much of the immediate purchasing intent from overseas mills, with the major exception being those mills requiring the upper end of the quality finer Merino types of 17 to 18.5 micron. These wools are diminishing in supply and the users of these wools are fully supporting the market at current price levels for the time being.

Next week’s big offering a factor

AWI said a contributing factor to the subdued tone of this week’s sales was the knowledge of the more than 51,000 bales rostered to sell next week.

“This is 21 percent higher volumes than the estimate of just six days earlier.

“A similar softer result is widely anticipated with buyers looking to buy in cheaper, but that may not eventuate as grower seller price resistance is occurring, as witnessed this week by the 15pc passed in rate.”

Sources: AWEX, AWI.


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