Wool prices plummet with large bale offering

Sheep Central November 4, 2016

wool-bales-selling-oct-2016WOOL prices fell this week, as the second largest offering of the season and buyer acceptance allowed prices to slide.

According to the AWEX Micron Price Guides Merino wools lost between 11-40 cents this week and crossbred fleece prices fell by 22-59 cents.

AWEX senior market analyst Lionel Plunkett said the offering of 47,220 bales – 2329 more than last week — was the second largest offering of the season.

After the AWEX Eastern Market Indicator recently hit a five-year high, Mr Plunkett said the EMI this week fell 28 cents to finish at 1303 cents.

“With a significantly larger selection to choose from, buyers were able to be more selective in their purchases.

“Again it was the stylish, high NKT (tensile strength), low cvh (co-efficient of hauteur) lots that received the greatest competition, and some of these wools, particularly in the finer sector only fell marginally for the week,” he said.

The EMI in US dollars closed at US998 cents, down US18 cents, with the $A-US dollar exchange rate up 0.29 cents to US72.28. Brokers passed in 12.5 percent of the offering.

Large Chinese buyer snaps up 18pc of Merino fleece

Large Chinese indent buyer Chinatex reportedly bought about 21 percent of the Fremantle Merino fleece offering and 30pc in Sydney, but only about 10pc of Merino fleece sold in Melbourne. The company finished with about 18pc of the total Merino fleece offering across the three auction centres.

Mr Plunkett said there was reduced interest in the lower style/spec lots, and these wools suffered the greatest losses, with some types falling by as much as 50 cents for the week.

Mr Plunkett said generally 19.5 micron and coarser were 30-40 cents easier, while 19.0 micron and finer were 20 to 30 cents easier.

Crossbred wools followed the lead of the fleece market, with all types and descriptions deteriorating as the week progressed, closing the week generally 20-60 cents below levels achieved at the previous sale, with 26.0 micron the hardest hit losing 60 cents for the week, he said.

The skirting market was a similar story, with all types and descriptions generally 30 to 40 cents cheaper, and the finer good style / spec skirtings the least affected. The falls in the oddment market were less severe with most types and descriptions generally easing between 10 and 20 cents for the week with again finer wools least affected, Mr Plunkett said.

AWI says market not in distress

Australian Wool Innovation’s weekly report said the market was not in distress, but the extra bales this week and the rostered volume to sell over coming weeks released the pressure valve on local and overseas buyers.

“The extra quantities on offer allowed a controlled reversing trend to be applied as sellers showed no desire to hold onto their wool and not accept the price.

“Passed-in rates did increase markedly though compared to auction sale results of the past month or so.

“It is a belief amongst some industry participants that the market is on the drift just for a short period as the volume is absorbed prior to a consolidation leading into the three-week Christmas recess,” AWI said.

A significant drop in intensity in Melbourne by a large Chinese indent buyer of Merino fleece aided the ease back of the market, AWI said.

“In Fremantle this buyer purchased 21.2pc of sold Merino fleece and in Sydney a staggering 30.1pc of Merino fleece was purchased by the one operator, and 35.6pc on the last day.

“In Melbourne though, they purchased just 9.8pc of the sold Merino fleece,” AWI said.

“This allowed all other buyers needing wool to just concentrate to Melbourne to obtain volume and at more advantageous price levels.”

AWI said the wool supply situation remains cloudy, as the offered quantities at the auctions are up 3.3pc year on year, whilst tested quantities are down 3.6pc.

“No doubt the wetter than normal late winter and spring has delayed shearing and delivery to store which goes a long way to explaining the tested figure, but the additional quantity at auction seems to perhaps indicate larger stocks in brokers’ stores than factored in by exporters and overseas users.

“Least affected this week was the resilient Merino carding sector which was basically dragged backward by just a few cents due to the reductions in all other sectors,” AWI said.

“Demand remains good, but local sellers are reluctant to sell forward given current unpredictable price direction and volumes available.”

AWI said sale bale volumes next week have grown by 10,000 bales since last week and 51,000 bales are now on offer.

“(It is) hard to see a change in trend just yet, as buyers will continue to buy to advantage in the large offerings.”

Sources: AWEX and AWI.


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  1. chick olsson, November 4, 2016

    AWI not concerned? With a huge contraction in supply over the past five years and a wool price the same in $US terms as ten years ago, and AWI is not concerned? Out of touch AWI. F minus score card.

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