Wool prices lift as major processors raise production levels

Sheep Central, February 3, 2023

WOOL growers reacted positively to a lift in the Australian auction market this week, cutting the passed-in bale rate in half to 6.6 percent as overseas demand strengthened.

The Australian Wool Exchange said the overall positive movement was driven by solid price increases for Merino fleece types.

Despite a smaller national offering of 38,516 bales, down by 5790 bales, the total amount offered this season continues to track above the last, AWEX said.

“Compared to the corresponding sale of the previous season there has been 8011 more bales offered, an increase of 0.8pc.”

AWEX said the main buyer interest continued to be focused on better style wools, with favourable additional measurement (AM) results, particularly those with low variation in length, which recorded the largest increases.

“That said, lesser style lots and wool that did not possess in demand AM results also recorded healthy increases, as buyers attempted to find value in the rising market.

“By the end of the series the individual Micron Price Guides (MPGs) for Merino fleece had risen by between 2 and 59 cents,” AWEX said.

“These rises combined with nearly all other sectors of the market posting gains (only the 26 micron MPG in the south recording a loss of 2 cents) helped to push the AWEX Eastern Market Indicator up by 18 cents to 1356c/kg clean.

“The EMI is still 93 cents lower than the corresponding sale of the 2021/22 season, a fall of 6.4pc,” AWEX said.

The oddment market had another strong week, solid gains in carding types pushed the three Merino Carding Indicators (MC) up by an average of 17 cents, AWEX said.

“As this is traditionally one of the busiest shearing times of the year, combined with the higher prices seen this week, next week’s offering climbs.”

There are currently 51,166 bales on offer in Melbourne, Fremantle and Sydney, which will be a designated superfine sale.

Buyers needing quick shipment drive market – AWI

Australian Wool Innovation trade consultant Scott Carmody said strong interest from most offshore interests for prompt and close shipment provided the initial drive for the market.

“The subsequent price rises saw those same buyers follow the prices upwards and gave auction buyers and exporters the necessary confidence to acquire further inventory.

“Funds permitting, this enabled most operators to stay in the market after forward risk had been covered right through to the conclusion of selling,” he said.

“Chinese businesses were where the strongest enquiries came from, but Indian and European interests also showed willingness to support the market at the ruling price levels.

“The smaller offering was somewhat unexpected given the large testing figures through the previous month and perhaps accentuated the expected gains to a certain degree.”

Mr Carmody said the more advantageous forex rates (around 0.5pc) available also helped push AUD levels higher at auction.

“Most new business written was for Merino fleece and skirting types which was highlighted by the 2.4pc gain placed on the Western Market Indicator value in the predominantly Merino-only selling centre at Fremantle WA.”

Mr Carmody said while access to skilled and unskilled labour is a global problem in textile factories — and almost all industry and services — the indications from all wool destinations is that production levels are at or are close to returning to pre-pandemic levels for quite a few of the significant buyers of Australian wool.

“Inflation rates globally and the extreme energy prices (more affecting in Europe) continue to be a major hindrance, but the intentions of the majority of manufacturers to resume normal activity in wool textiles is being signalled, both anecdotally and perhaps by the improved demand at auction.”

Click here to see the latest AWEX Micron Price Guides.

Sources – AWEX, AWI.


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