WOOL prices improved across the entire Merino micron range this week, with lower quality wools improving the most.
Renewed interest from China added to European and Indian demand to push the AWEX Eastern Market Indicator up 13 cents to 1331c/kg clean.
Despite the $A-US exchange rate increasing 1.43 cents during the week to US76.75, and the EMI in US dollars rising 29 cents to US1022 cents, brokers passed in just 3.5 percent of the 34,556-bale offering.
AWEX senior market analyst Lionel Plunkett said unlike in recent sales where it has been the finer microns enjoying most of the price rises, this week there were gains across the entire merino micron range. He said wools from 16.5 microns all the way through to 23 micron generally enjoyed rises of 15-30 cents.
“Merino skirtings were generally 20 to 30 cents dearer for the week, again with the most buyer interest centred on the FNF (<2%) stylish lots.”
Mr Plunkett said the limited number of crossbred wools were generally unchanged.
“Merino cardings received excellent buyer support on a limited offering, generally rising between 15 and 25 cents for the week.
“A large stylish selection of washing lambs (<0.3pc) offered in the Fremantle sale attracted very strong competition and as a result were up to 50 cents dearer compared to the previous sale.”
Techwool Trading export manager Josh Lamb said the market going forward to Christmas is looking “very very healthy” for “pretty much everything.”
“The only thing that is still just a little bit flat is the medium micron crossbreds from 28-32 microns.”
Mr Lamb said fine wool prices were being helped by the resumption of Chinese buying for uniform contracts centred on 18.5 micron, but buying the best value wool around that. This had been exacerbated by the lack of supply, opening up the gaps from broader Merino wools, he said.
Fox and Lillie Rural brokerage manager Eamon Timms said the market could improve next week, with fresh enquiry for wool coming from China, including for carding, knitwear and weaving types.
Mr Timms said crossbred wools up to 29.5 micron were tradeable, but there were huge stocks of crossbred yarn and top in China, after fashion changed away from heavier fabrics for overcoats.
Bidding went against forex influence
Australian Wool Innovation said in its weekly market review that despite all of the major trading currencies going severely against the $A local price advantage, all buyers and exporters showed a willingness to participate fully in acquiring inventory this week.
“This strong buying activity forced prices up against the hampering forex influence, reinforcing the view of the increasing demand scenario emanating from all wool manufacturing destinations.”
AWI said the US EMI movement upwards was the largest weekly rise witnessed for some time in that currency. With the CNY (Chinese Yuan) basically pegged to the US dollar, similar rises in Yuan were also recorded.
“Within the Merino fleece sector it was the lower quality end of the offering that appreciated the most,” AWI said.
“For descriptions finer than 19 micron, the lower types gained 30 to 40c/kg clean, whilst the better types put on just 5 or so cents.
“This was expected as the suddenly and significantly stronger Euro impacted upon the strength of any European orders in the market.”
“The micron price guides somewhat masked the strength of the rise this week at the super fine (finer than 18.5micron) end of the selection.
“The 19 to 23 micron types came under intense scrutiny once more as the price gap to the finer types has made those wools more attractively priced in comparison,” AWI said.
“All of these broader Merino types gained upwards of 20ac/clean g by the close of selling, with the close being the strongest point of the week.
“Of particular interest this week was the re-emergence of the largest Chinese indent buyer on the final day of selling after a few weeks of “slow operations.”
Other crossbred wool nations also holding stocks
AWI said the crossbred offering (26 to 30 micron) trended cheaper throughout selling this week as that sector is more reactive to immediate currency movements.
“Additionally, it is known that stocks are still being held of mainly 30 micron and broader in some Chinese factories.
“Other crossbred wool growing nations are holding out for better prices and thus are building greasy stocks, albeit small in volume,” AWI said.
AWI said a consolidation of the market was widely anticipated next week as exporters and indent buyers reassess the values within each individual market segment.
“Of most interest is the talk of more upside being apparent on types broader than 19 micron. Recent history shows a larger than normal price differential compared to the finer types.
“The finer end of the market is expected to remain strong as the European and Indian interest is ongoing.”
AWI said the expected larger quantities delayed by the wet weather are now hitting the market and around 45,000 bales will be offered each week for the next fortnight.
“This extra quantity will give purchasers a chance to be more selective when trying to complete their outstanding commitments which will apply less upward price pressure on the market.
“A firm market is expected for the Merino sector, with crossbreds of 26 to 30 micron again very much influenced by the currency movements.”
Next week’s national offering will be nearly 45,000 bales, in Sydney, Melbourne and Fremantle.
Click here for the latest AWEX Micron Price Guides.
Sources: AWI, AWEX, Fox and Lillie Rural, Techwool Trading.