Markets

Wool prices lift for smallest seasonal bale offering

Terry Sim, June 23, 2017

WOOL prices surged for the smallest seasonal bale offering this year at auctions in Sydney and Melbourne this week.

The AWEX Eastern Market Indicator rose 27 cents to 1533c/kg clean as brokers offered 22,298 bales.

AWEX senior market analyst Lionel Plunkett said brokers also catalogued the smallest Merino fleece offering in more than eight years. Brokers passed in 5.4 percent of the overall offering.

Mr Plunkett said buyers this week fought hard for quantity, even lesser style wools and wools with less favourable test results experienced similar gains to the better style and spec lots. Fremantle had a one-week recess due to a lack of wool.

“The lack of supply meant the probability of a falling market remote, the more likely scenario was price increases and that is exactly what transpired.

“The first selling day saw buyers scrambling to secure their share of a very limited offering, all types and descriptions enjoyed general price rises of between 20 and 40 cents.”

Mr Plunkett said the second day was similar to the first, although less extreme.

“Buyers continued to push for quantity but became a little more selective in their purchases, this resulted in further market increases of 10 to 20 cents.”

The skirting offering was also the smallest for the year and the result was very similar to the fleece, he said.

“All types and descriptions generally rose by 20 to 30 cents, again it was the lower vegetable matter lots (<3.0%) and wool exhibiting favourable length and strength results that managed the largest gains. The crossbred market continues to improve, this week saw price increases of between 5 and 10 cents, and again it was the better prepared lines that attracted the greatest buyer support. The oddment offering was also the smallest of for the year, this resulted in the carding indicators rising by an average of 12 cents for the week. Next week sees Fremantle resume sales, pushing the national quantity up to 36,993 bales. ><3pc) and wools exhibiting favourable length and strength results that managed the largest gains.”

Mr Plunkett said the crossbred market continued to improve, with price increases of between 5 and 10 cents, and again it was the better prepared lines that attracted the greatest buyer support.

“The oddment offering was also the smallest of for the year, this resulted in the carding indicators rising by an average of 12 cents for the week.”

Low supply is significant factor

Australian Wool Innovation’s weekly market report said the extremely low supply of wool nationwide obviously played a significant factor in the market strengthening.

“Some wool selling brokers are also reporting that it is apparent that many wool growers are opting to hold their clips and then sell in the new financial year.

“This is leading to sales being loaded for the first two sales in July, which more often than not, leads to buyers being able to be act more selectively.”

AWI said the weakening Australian dollar against the US dollar was also a positive influence as rates went 0.8 percent in favour of overseas buyers. The EMI in $US terms increased 12 cents to US1158 cents this week.

“Contrary to the rising market levels and favourable currency, buyers and exporters reported a widespread lack of fresh business being achieved.

“The purchasing at auction was therefore being dominated by those buyers looking to close out any outstanding forward positions,” AWI said.

“Stocktaking by exporters at these levels was reported being at a zero interest level.

“The indent buying orders from China were initially aggressive on Merino fleece, but on the final day, particularly in Melbourne, the orders seemed to dry up almost instantaneously,” AWI said.

“This pull back put a shudder through the auction room, and towards the close, most buyers were reporting a market at 15 to 20 lower on the last sections of the sale day.”

AWI said the small offering of the better types destined for Europe were upwards of 65-70c/kg clean dearer, with 16.5-18 micron sale lots taking most advantage of the stronger demand.

“Conversely, those wools with 1.5-3pc vm and 16.5-18 microns headed downward and were 15-20c/kg cheaper by the close of selling for the series.”

AWI said about 37,000 bales go to auction next week, with sales resuming in Fremantle, which should put the seasonal offering through the 1.7 million-bale mark.

“Some purchasing hesitancy may occur as volumes in the next three weeks are substantially above the offering of the past month or so.

“With buying intent so sporadic recently, it seems certain an unchanged market is the least likely result,” AWI said.

Click here for the latest AWEX Micron Price Guides.

Sources: AWEX, EMI.

HAVE YOUR SAY

Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

Get Sheep Central's news headlines emailed to you -
FREE!