Markets

Wool prices hold firm, with the prospect of a stronger market next week

Sheep Central, August 19, 2016

Wool sales Landmark1 MelbourneWOOL prices mostly held firm this week despite a softer opening to eastern state auctions this week.

The AWEX Eastern Market Indicator finished up 1 cent to 1298c/kg clean, with brokers passing in 4.8 percent of the 41,153-bale offering. The EMI in $US terms also lifted 1 cent to US1001 cents clean.

AWEX senior market analyst Lionel Plunkett said the fleece market opened in the eastern markets on a softer tone than the previous auction, with all types and microns recording modest falls of 10 to 15 cents.

“However, as the day unfolded buyer interest increased and the market firmed, including the Fremantle sale which opened later in the afternoon.

“By the close of the day the losses were generally limited to around 5 cents clean when compared to the previous week,” he said.

Mr Plunkett said although there was some adjustment of prices in the broader microns at the Sydney auction, where they dipped slightly, day two of the sale continued to retain solid buyer interest and the market opened a few cents dearer.

“Prices continued to firm throughout the day and the majority of AWEX Micron Price Guides (MPGs) finished above those of last sale.

“Throughout both days any best spinner-style wools with excellent test results were highly sought after and commanded significant premiums, especially in the finer microns,” he said.

“Unlike recent sales where inferior style/spec wools bore the brunt of the easing market, this week’s sale saw these types hold their ground to close the week fully firm when compared to last week’s close.”

Mr Plunkett said skirtings also continued to sell well throughout the week, with the most interest shown in the low vegetable matter (<2pc vm) lots. Locks and crutchings generally traded at similar rates to the previous sale. Next week’s national offering reduces to just under 32,000 bales as Fremantle has a one week recess. As a result of AWIS Wool Week activities in Melbourne, sale days will be held on Tuesday and Wednesday.

Stable Australian dollar enabled consistent pricing

Australian Wool Innovation’s weekly market report said the relatively stable Australian dollar exchange rates set the steady tone at this week’s wool auction sales, enabling more consistent pricing by buyers. Sale results largely met the pre-sale expectations of a firm unchanged market, AWI said.

“Whilst buying interest was subdued and slightly cheaper on the first day of selling, competition appeared to gain momentum as the week progressed and closed strongly, albeit with a strange lull right at the close of selling as the (Australian) dollar momentarily spiked to US77.50 cents.”

AWI said buying by the Chinese indent operators continued at strength from the outset and throughout Wednesday, but eased back somewhat on the final day.

“Cheaper forward offers received by their clients began impacting negatively on buy-in prices and therefore purchasing voracity,” the AWI report said.

“Buyers purchasing for forward orders gained strength as the general market waned and this ultimately turned the market to the positive on the final day.”

AWI said a stronger market is expected next week.

“Reports of fresh business being written and outstanding orders needing completion abound and if the dollar weakens to any degree, buying interest will in all likelihood strengthen.”

Click here for the latest AWEX Micron Price Guides.

Source: AWEX.

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