WOOL prices steadied at auctions this this week, despite some discounts for some tender lines, indicating trade satisfaction with current price levels.
The Australian Wool Exchange’s eastern Market Indicator held firm at 1525c/kg clean, with brokers passing in 6.9 percent of the 40,699-bale offering.
The EMI in US$ fell just 1 cent to US1220c/kg clean, with the A-US$ exchange rate at US80.05 cents, down 0.05 cents for the week.
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AWEX senior market analyst Lionel Plunkett said on the first selling day, most types and descriptions sold at levels very close to those achieved at the previous sale. The EMI managed a modest 2-cent rise, closing at 1527 cents.
On the second day, wools generally traded within a few cents of the prices achieved on the first day and the EMI gave back the 2 cents it gained, closing the week unchanged at 1525 cents.
“There has been a gradual increase in the number of wools exhibiting large mid breaks and these types are now starting to attract more significant discounts, especially in the finer microns.
“The prevalence of these wools was a driving factor in pushing the market indicators in some microns down,” Mr Plunkett said.
“Conversely, any lots with a mid-break of 20 or below are now attracting even greater premiums, as buyers attempt to average down their purchases.”
AWEX said the skirting market had a mixed week with general gains of 10-20 cents on the first selling day, which were completely eroded on the second day, with the category finishing generally unchanged.
The crossbred sector experienced losses this week, with 26-32 micron wools generally falling by 5-20 cents, and poorly prepared lines the most affected. The oddment market was the best performing sector for the second consecutive week. A stylish selection attracted excellent support, resulting in the three carding indicators rising by an average of 26 cents.
Trade comfortable with current price levels
The Australian Wool Innovation weekly market report said the ruling sentiment around wool remains positive from all sectors, as local traders and growers are largely comfortable operating within the current levels of trade.
“Generally speaking, buyers are seemingly able to pass on the price up the chain and growers are mainly accepting of the offered values.
“Daily adjustments to price due to currency and finance availability will continue to occur as will the depression of prices due to harder to place sale lots,” AWI said.
“The growing incidence of higher PobM (position of break in the middle) and higher CVH% (co-efficient of variation of hauteur %) sale lots being the primary cause.”
Wool volumes ahead due to season
AWI said volumes of wool available at auction are way in front of where they were last year at the same time — in fact almost 10pc.
“The continuing dry conditions across large parts of our growing districts has allowed shearing to go unimpeded for months running, which is a two-edged sword, given that many wool growers are desperate for rain to alleviate the drought conditions they are facing.
“Production figures for the season will be now under pressure as sheep are being off loaded daily,” AWI said.
AWI said the costs of feeding and the associated intensive labour requirements make selling off sheep rather than retention an easy decision, given the attractive prices being made at the sale yards.
AWI said more than 400 delegates attended the annual Nanjing Wool Market Trade Conference earlier in the week at Tongxiang, China.
“Over 400 delegates were in attendance, and the mood was generally buoyant and confident. A few concerns were raised from the manufacturers around the perceived high wool prices, but in general, acceptance of those levels remaining for the short term was the consensus.”
Next week about 43,000 bales are catalogued for sale, with Melbourne selling on Tuesday and Wednesday to accommodate a Friday public holiday for the AFL grand final. The Sydney and Fremantle auctions will sell on Wednesday and Thursday.
“Similar operations to this week are expected as September shipments are being completed and buyer’s letters of credit flow in, providing stronger liquidity for the wool market,” AWI said.
Sources: AWEX, AWI.