Markets

Wool prices move lower, but keen enquiry augurs well for sales resumption

Sheep Central, July 15, 2016

Wool sales Landmark1 MelbourneWOOL prices moved lower this week as the Australian dollar strengthened, but some buyers reported keen enquiry for the new season set to start after the annual three-week mid-year sale recess.

The AWEX Eastern Market Indicator closed 9 cents down to 1311c/kg clean, with the $A-US exchange rates up 0.92 cent to US76.16 cents.

AWEX senior market analyst Lionel Plunkett said the continuing strength in the Australian dollar weighed on wool prices. Brokers passed in 8.3 percent of the 40,935-bale offering.

“In $US terms, the EMI continued to climb and made a 12-month high, closing the week 5 cents higher at 998 US cents.

“Its most recent low on this basis was made only nine months ago and it is now trading 33pc higher after making steady increases.”

Mr Plunkett said the spike in wool prices over recent weeks appeared to encourage wool into the marketplace and just under 41,000 bales were eventually offered this week, almost 2000 more than last sale.

“The Merino fleece portion of the catalogue was the main drag on the indicator, with prices as much as 25 cents lower.

“The finer types were least-affected, particularly the more stylish types, which even managed to firm in selected pockets,” he said.

“Despite the negative result there were some encouraging signs on the final day when a firming tendency was noted towards the close.”

Merino skirtings bucked the trend of the fleece sector and generally held firm on the previous week’s levels, Mr Plunkett said.

“Crossbreds recorded mixed results, the limited finer types of 25/26 microns surged 30 cents or more on the back of strong support, whilst the broader 30/32 categories continued to trend lower.

“The Merino Carding Indicators closed slightly lower at all three auctions.”

Forward sellers took opportunities

AWI’s weekly market report said the power of the Chinese indents buying relaxed somewhat this week which allowed forward sellers and other destination users more purchasing opportunities within the Merino fleece sector.

“The quality of the offering, whilst being diverse, was largely at the better end of the spectrum, which suited many of the outstanding orders and easily fit the current types under good enquiry.

“In fact, the better types of 18.5 micron and finer were extremely well sought by three or four operators and gained 30ac/clean kg.”

AWI said of most interest to buyers were those clips showing good staple strength, crimp definition and quite often clips part of quality schemes.

AWI said the Fremantle market outperformed the Sydney and Melbourne auctions.

“This provided an extremely strong finish to the “year”.

“Usually most sales prior to a recess can produce much more mixed and negative results than witnessed this week,” the AWI report said.

“In fact, a more advantageous $A rate would have seen a stronger market.

“Significant for the new season prospects was buyers reporting keen enquiry right up to and even past the conclusion of sales.”

More than 50,000 bales are expected to be offered when sales resume in Sydney, Melbourne and Fremantle from August 8 and wool starved users should be keen to participate, AWI said.

Click here for the latest AWEX Micron Price Guides.

Sources: AWEX, AWI.

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