Wool prices lift around demand lift and dollar volatility

Sheep Central, October 14, 2022

DEMAND lifted for Merino and crossbred wool at Australian auctions this week, underpinned mainly by Chinese buyers with some help from India.

The Australian Wool Exchange’s Eastern market Indicator finished 36 cents higher at 1271c/kg clean, helped by a weaker Australian currency.

Broker offered 31,023 bales and after 7 percent were withdrawn, 4.3pc were passed in. The offering also included 1084 bales from The New Zealand Merino Company in Melbourne on Tuesday, of which 19.7pc were passed in.

The Australian Wool Industries Secretariat said there were price rises over all micron ranges and all types, except for the oddments in some markets. The market was best at the medium and broader end of the Merino micron range; and among the crossbreds, although coming from a low base, AWIS said.

AWIS said exchange rate was a strong driver in this week’s market, with a 4pc fall in the US exchange rate. The Australian dollar has now fallen from US69.45 cents to US62.71 cents, or 9.7pc, over the last eight weeks.

Exchange rate volatility not good for confidence – AWI

Australian Wool Innovation trade consultant Scott Carmody said it was a very welcome turn around for the wool market this week, as domestic prices reversed their downward slide for the first time in three months.

“It was not so much a case of new buyers entering the market, but greater activity amongst the usual list of buyers that lifted prices.

“Gains were typically between 30 and 80 cents across better Merino fleece lines at all three selling centres,” he said.

He said the lift in the EMI came for a much-reduced volume of 32,107 bales, and Western Market Indicator gained 44 cents to end the week at 1407c/kg clean.

“Tempering the large gains was the true indicator of demand, the EMI in US dollar terms, as it fell US10 cents to US797 cents/kg clean, showing the influence foreign exchange has on the trade.

Mr Carmody said the Australian dollar’s volatility in its sharp fall to US62.50 cents at the close of trade does not instil confidence for those operating in the trade.

“Nevertheless, marginal gains in domestic terms were also seen for broader wools with lifts of up to 20 cents while Merino carding prices remained relatively steady.

“The smaller volumes of wool coming onto the market for this time of year are set to continue given the massive disruption in wool supply due to the ongoing flooding in many wool growing regions,” he said.

Next week 35,442 bales of Australian grown wool are expected to be on offer across the three selling centres.

Source: AWIS, AWI.


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