Trade

Wool prices down for largest offering in 12 months

Sheep Central, December 5, 2014

wool bales1Wool prices lost ground this week in the largest national offering in 12 months, the Australian Wool Exchange said.

The AWEX Eastern Market Indicator closed after auctions in Melbourne, Sydney and Fremantle on 1054 cents, down two cents, and brokers passed in 10.5 percent of the 54,237-bale offering.

AWEX senior market analyst Lionel Plunkett said Melbourne was the main contributor, with its largest offering in three years of 31,283 bales making up 58pc of the national total.

“The quality of the selection has been improving recently with best style, 40Newtons/kilotex, and low mid-break types all representing a higher proportion of the fleece catalogue,” Mr Plunkett said.

“Despite the improvement in quality, a positive market last week, as well as a plunging Australian dollar which plumbed fresh four-year lows, the market lost ground this week.

“The medium/broader range in Melbourne on Wednesday gave the only positive signal for the week when they lifted 5 to 10 cents,” he said.

“Otherwise the market tracked lower over the three days in all three selling centres.

“The finer microns generally led the way, retreating by 20 cents clean on the back of reduced support for the lower spec types.”

On a regional basis Fremantle was the worst performer, closing 20 to 30 cents lower after a lacklustre final day, Mr Plunkett said.

“Merino skirtings followed the fleece sector lower to the tune of 10 to 20 cents.

Depreciating $A was main market influence

Australian Wool Innovation consultant Scott Carmody said the major trading influence was the rapidly depreciating AUD which spent the latter part of the sales under the US84-cent mark.

“Whilst the crossbred market benefitted greatly with some large buying orders pegged against the $US adding more local currency to the local sellers’ returns, there was little joy transferred into the Merino sector.

“At present, the majority of the exporting of these Merino types appears to be from the forward sellers, whom would have
most likely covered their forex (foreign exchange) exposure immediately upon booking the orders some time back,” he said in the AWI Wool Market Review.

Crossbreds were stand-out category

 

“Crossbreds continue to be the stand-out category in the wool market with another successful week, firming 10 to 20 cents over the sale.”

Mr Plunkett said the 28, 30 and 32 micron wools are now at, or close to, 12-year highs as a result of strong support over the past month, where they have risen 5-8pc.

“The Merino carding sector was another of the few areas which finished in positive territory with increases for the week were in the 5 to 15 cent range.”

He said the current offering forecast for next week — the final sale before the three-week Christmas recess – was 62,375 bales.

“Achieving that quantity will make it the largest sale since April 2008.”

Melbourne opened on a negative tone

Landmark wool risk manager Anthony Boatman said prices made another slow start before a recovery on Wednesday, then a softer close.

Sales in Melbourne on Tuesday, started on a negative tone, with Merino fleece wools losing around 5-10 cents from fine to broad categories, he said.

“Lots with high mid‐break percentages opened 15-20 cents lower, but improved towards the close of the day’s trade.

“Crossbreds continued to post steady gains, with AWEX reporting the 30 micron categories at 12-year highs, and 28 micron at six-year highs,” he said.

Fine wools continued to underperform on Wednesday, with losses of 6-7 cents recorded for 18 micron and finer lines.

“The 19 to 21 micron categories fared better, rebounding from the previous day’s losses with gains of 10-15 cents.

“Crossbreds remained firm to unchanged, as did oddments.”

On Thursday, prices eased back a few cents across the Merino fleece wools. However, most losses were less than five cents, Mr Boatman said.

“Most crossbreds continued to lift, pushing another few cents higher, while oddments rallied, pushing the Merino carding indicator above 800 cents.”

Prices slump 10-20 cents for under 18.5 microns in Sydney

Mr Boatman said the Sydney sale opened on Wednesday with prices down by 10-20 cents across the 18.5 and finer micron categories, on the back of a less stylish offering compared to previous weeks.

“The 19 through to 22 micron categories were better supported, closing unchanged from last week’s closing levels.

“Oddments were firmer with locks gaining 5-10 cents, and stains and crutchings were unchanged,” he said. “Crossbreds also closed firm to unchanged.”

Mr Boatman said Merino fleece wools sold mostly unchanged during Thursday’s trade, with just the 19.5, 18, 17 and 16.5 micron wools easing a few cents, again attributed to the lower style of the selection.

“Crossbreds managed to climb higher again, with gains mostly around 5-10 cents. “Oddments also picked up another 5-10 cents for most categories.”

Fremantle loses most of last week’s gains

Mr Boatman said in Fremantle on Wednesday, the fine through to medium micron wools closed the day down 10-15 cents.

“Amongst the oddments, locks picked up 10 cents, while other categories were little changed.”

Results were similar during Thursday, with the majority of wool on offer from 18 through to 22 micron selling a further 10-15 cents lower, he said.

“The 19 micron categories were quoted with the largest easing margin of 18 cents.”

Oddments were generally unchanged.

Forward markets robust at reasonable prices

Mr Boatman said forward markets have seen robust bidding throughout the forward curve.

“While still in backwardation, the discount to physical levels is very small. “This has presented very good opportunities for hedging of next year’s production, with buyers considering most reasonable asking prices.”

Sources: AWEX, AWI, Landmark.

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