LOWER supplies and more favourable exchange rates helped lift wool prices at Australian auctions this week.

The Australian Wool Exchange said the market recorded an overall increase this week, the second consecutive selling series of positive movement.

“With eight selling series conducting this season we can more accurately compare seasonal quantities,” AWEX said.

“Season-to-date there has been a total of 267,613 bales offered at auction, this is 74,897 bales less than the previous season, a reduction of 21.9 percent.

“The overall upward movement was predominantly driven by the higher prices on offer for Merino fleece types,” AWEX said.

“This was reflected in the movements in the individual Micron Price Guides (MPGs) for Merino fleece, which across the country added between 1 and 34 cents for the week.

“The Merino skirting market tracked similar path to the fleece, with small increases generally recorded across all types and descriptions.”

AWEX said the benchmark Eastern Market Indicator (EMI) gained 8 cents for the week, closing at 1099 cents/kg clean.

“The EMI has now risen for three consecutive selling days, adding 13 cents across these sales.”

AWEX said currency fluctuations have again played a large role in the market movements.

“Further weakening of the Australian dollar, meant the market was unchanged in US dollar (USD) terms.

“The EMI dropped by one US cent on the first day of selling, making this the fifth consecutive selling day where the market fell in USD terms,” AWEX said.

“On the second day, the EMI recorded a one cent increase and the EMI closed the week where it started, at US731 cents.”

AWEX said with fewer bales offered and with little change in the prices on offer, the total dollar amount of wool sold this season is also well down.

“Season to date there has been a total of A315 million dollars’ worth of wool sold at auction.

“This is A$98 million dollars lower than the corresponding sale of the previous season.

Next week’s offering is of a similar size. There are currently 32,121 bales on offer nationally.

Weekly purchase volumes well down – AWI

Australian Wool Innovation trade consultant Scott Carmody said continuation of the smallish offerings and more advantageous foreign exchange rates were the primary factors affecting sale results at this week’s Australian wool auctions.

“Almost all Merino types and descriptions edged 10 to 15 cents higher in Australian dollar (AUD) terms.

“US dollar (USD) values also headed into positive territory, albeit by the barest of margins,” he said.

“The more favourable foreign exchange rates caused by the weakening AUD, accounted for the majority of the spot price improvements.

“Most currency rates dropped AUD converted values by around 0.6percent, with the CNY and USD creating the most opportunities to assist local auction price gains.”

Mr Carmody said in the past few sale weeks this currency-led cheapening for overseas users extracted some new business.

But he said volumes being purchased will need to improve markedly if manufacturers are to hit peak garment production in time for the upcoming Northern Hemisphere winter/fall retail selling period.

“This particularly applies to European-based processors who are faced with ever increasing lag times for delivery and of course the significant increases in costs associated with that extra sailing time.

“Weekly volumes being offered are well below that usually seen at this time of the selling year,” Mr Carmody said.

“Part of that issue is the forecast decline in production.

“Dry times have affected the past 8 to 12 months of wool growing across many regions, but mid-August did see some welcome wet weather in those same areas and has delayed shearing to a minor extent,” he said.

“Quantities being auctioned are also down due to some sellers not accepting current price levels and choosing an alternative wait and watch strategy.”

Mr Carmody said the large first stage processors remain at and near the top of the buying lists.

“Additional competition did appear though from Australia’s largest export trading company which was stronger in its auction actions than seen for a few weeks now.

“That activity inevitably brings confidence to others through the sale rooms, resulting in an auction atmosphere somewhat more buoyant than the previous month or two, even though price advances were rather modest.”

There are currently 30,000 Australian stored bales rostered to be auctioned over two days next week in eastern markets, but only one day is required for the sale in Western Australia

 

Sources – AWEX, AWI.