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Wool prices lift despite ongoing shipping issues

Sheep Central, March 11, 2022

AUSTRALIAN wool prices improved at auctions this week despite currency movements and ongoing logistics issues.

The Australian Wool Exchange said the national offering reduced slightly to 49,431 bales, due in part to there being only two selling days available and brokers passed in 10.1 percent.

AWEX said the market instead recorded upward movements in nearly all sectors, on the back of sustained, strong, widespread competition from the opening lot of the series all the way to the closing hammer.

“By the end of the series, the individual Micron Price Guides (MPGs) for Merino fleece ranged from fully firm to +26 cents, with only the 16.5 micron MPG in the south posting a loss (-14 cents).

“The skirtings followed a similar path to the fleece, with general rises of between 10 and 20 cents recorded,” AWEX said.

“The crossbred sector also managed general increases and the MPGs for 28 to 32 micron added between 1 and 13 cents for the week.

“The AWEX Eastern Market Indicator (EMI) rose by 6 cents for the series, closing the week at 1413 cents/kg clean.”

AWEX said exporters have long been reporting that shipping availability is becoming an increasing problem, as their ability to book vessels for overseas deliveries becomes ever more difficult, and this has been exacerbated due to recent high volumes of overseas sales.

“These shipping difficulties combined with all wool dumps reporting that they are nearing maximum capacity, and therefore possibly struggling to meet shipping deadlines, had some exporters concerned.”

AWEX said these concerns prompted some exporters to speculate that this series the market would retract, with some believing the losses could be large, but these expectations were not realised this week.

Logistics issues are hampering local wool traders and exporters – AWI

Australian Wool Innovation trade consultant Scott Carmody said there were general price gains in Australian wool auctions gains this week, despite the Australian dollar continuing to ascend in value against all of the major trading currencies.

“General gains of 10 to 15 cents were recorded on the Merino sector alongside a mediocre 5-cent increase in crossbred wool types.

“Global stocks of those broader wools are slowly moving again, giving some minor confidence that more of that type can find a home at the consumer level,” he said.

“Clearance rates remain strong with 89.9pc of all wool offered being cleared to the trade.

“Merino and oddments cleared 90.8pc, but crossbreds cleared just 86.3pc as prices offered in that sector continue their slump.”

Mr Carmody said the Western Market Indicator (WMI) enjoyed the best of buyer action by moving 13 cents or 0.9pc higher to 1457c/kg clean, but once again a relatively lower clearance was achieved with 14.8pc being held back as seller price expectations were not met.

“In US$ terms, the EMI gained US7 cents or 0.7pc to close at US1034c/kg clean,” he said.

“Many of the buying fraternity, on both sides of the contract, are lamenting that logistics issues are impeding normal business activities.

“The locals are missing selling/trading opportunities due to delays exceeding well over a month now,” Mr Carmody said.

“This is tightening funds and consequently overseas buyers are unable to get the quantities required fixed at current price levels, so production schedules can be set for the immediate to medium term .

“Demand is reported as being good from all destinations, as Indian and European interests continue to apply strong competition in the auction rooms to the dominant Chinese,” he said.

“Direct buying and offshore derived indent orders from the first stage manufacturing sector is alleviating any funding issues at present as the larger volumes on offer are mainly being sold.

“This relieves some of the pressures on our local traders to finance all or indeed more of that inventory.”

Next week’s sales will again be held on Wednesday and Thursday, due to the public holiday in Melbourne on Monday. As the sale is restricted to just the two selling days, the national offering is of a similar quantity to this week. 48,544 bales are currently expected to be offered in Sydney, Melbourne and Fremantle.

Sources: AWEX, AWI.

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