MOST Australian wool prices drifted lower again this week, although some crossbred and some fine Merino categories showed positive movement at auctions.

The Australian Wool Exchange said the market generally fell again this week, although the reduction was marginal and there were positive movements within certain pockets of the market.

The national offering rose slightly to 35,518 bales, down from the originally transmitted total, after 6.1 percent was withdrawn prior to sale and brokers passed in a further 6.2pc.

“In the Merino fleece, the market movements were varied and the individual Micron Price Guides (MPGs) in this sector ranged between plus 4 and minus 29 cents.

“There were mixed results in the oddments, and skirtings and crossbreds had the net result of a 5-cent fall in the AWEX Eastern Market Indicator (EMI) for the series.”

AWEX said the stagnant nature of the market for the 2024 calendar year is best highlighted when looking at the average daily movements of the EMI, with both positive and negative movements combined.

“There have been 44 selling days, calendar year to date.

“When the positive and negative movements are combined, there has been a total of 236 cents of movements, a daily average of just 5.4 cents.”

AWEX said although the daily market movements have been small, the market is trending lower.

“The EMI opened the 2024 calendar year at 1212 cents/kg clean and the EMI is now trading at 1130 cents, a fall of 82 cents, equating to a 6.8pc reduction.

“That said, the EMI is now sitting marginally higher than the beginning of the season,” AWEX said.

“The EMI opened the 2023/24 season (beginning of July 2023) at 1126 cents.

“Interestingly, year on year comparison is almost identical to the start of the calendar year.”

AWEX said at the corresponding sale last year, the EMI was 1214 cents/kg clean.

Reasonably steady demand – AWI

Australian Wool Innovation trade consultant Scott Carmody said there was not much change to the overall price level at this week’s Australian wool auctions.

“All types remain under reasonably steady demand, with just the broader than 20micron Merino types adjusting downwards by any significant margin.

“The 0.4pc stronger Australian dollar (AUD) value against the US dollar (USD) was offset by the 0.4pc lower AUD auction indicators making for a rather mundane sales series.

“This week saw just a one-day sale in Fremantle as national volumes start to dwindle prior to the end of the financial year,” he said.

Mr Carmody said the big three Chinese top maker representatives dominated the Merino market his week.

“These influential buyers took advantage of the generally subdued trader activity, particular from the largest buying exporter.

“These direct buying orders and indent operations are becoming more of a normal feature of the auction scene lately, and not just restricted to China,” he said.

“This method of operation obviously takes away opportunities from traders as volumes available to forward contract are restricted under sluggish demand scenarios and direct buying at auction by the major overseas players.

“Most big traders now have an indent client or two to keep purchasing ticking over and to cover off some overheads,” Mr Carmody said.

“Buying what you can sell/ship at a fixed price for prompt shipment or close delivery at all parts of the pipeline is key.

“This low-risk investment almost guarantees a rather unspectacular return but lessens the chance of the original capital spent converting into a loss,” he said.

“Opportunities do diminish though for returns on investment worthy of the speciality of export services provided.

“This style of operation is not restricted to the greasy wool buying.”

Mr Carmody said a major portion of the supply chain, right from the first stage manufacturing all the way through to garment making and retail, is staying true to risk aversion strategies.

“The pervading uncertain global economy, significant areas of conflict and the muted consumers appetite for discretionary spending on luxury clothing are the leading factors.

“The lower risk investment by not stocking raw wool, top, yarn or garments heavily, or contracting too far into the future generally brings more stability to business as seen by the relative narrow trading bands of the 23/24 season,” he said.

Next week’s offering is forecast to fall below 35,000 bales. There are currently 33,164 bales expected to be on offer in Sydney, Melbourne and Fremantle. Even if this full quantity is realised, it will be the smallest sale since January, AWEX said.

Click here to see the latest AWEX Micron price Guides.

Sources – AWEX, AWI.