Markets

Wool prices rise as top sales coincide with supply concerns

Sheep Central, October 30, 2015

Wool sales Landmark1 MelbourneWOOL prices jumped sharply this week as concern about forward supplies coincided with improved top sales overseas.

The AWEX Eastern Market Indicator lifted 45 cents to 1250c/kg clean this week, with brokers passing in just 2.7 percent of the 42,178 bales offered.

In US dollar terms the EMI rose 17 cents to US889 cents as the A-US dollar exchange rate fell 1.22 cent to US71.11 cents.

AWEX senior market analyst Lionel Plunkett said the strong buyer support for Merino fleece types in the NZ-only catalogue on Tuesday was confirmed in the sales at Sydney, Melbourne and Fremantle over the following two days.

“The gains were reasonably consistent over all microns and across each day.

“Building on a strong opening, the improved momentum carried the market higher over the course of each selling day,” Mr Plunkett said.

“Thursday deviated slightly from that format, when prices moderated at the Melbourne sale in the last hour, especially through the 20/21-micron range where there was a large offering – almost 3000 bales.

“Despite the subdued finish most types still increased 30 cents for day, resulting in weekly rises of 60 cents for a number of the Merino microns (16.5-24 microns).”

Merino skirtings also found good support this week, rising as much as 50 cents, Mr Plunkett said.

“Crossbreds were mostly 30 cents higher at this sale while the Merino Carding Indicators struggled to keep pace with the rest of the market, firming by a modest 5 to 10 cents.”

Mr Plunkett said although the 42,178-bale offering this week was the largest since early July, concerns still circulate around ongoing volumes.

“Auction throughput is almost 8 percent lower for this season when compared to last season, and forecasts over the next month remain flat.

“The November/December period last year averaged 50,000 bales each week, whereas the next three weeks are expected to average 42,000 bales,” he said.

Supply concerns coincides with improved top demand

Techwool Trading export manager Josh Lamb said the principal reason prices improved this week, was an improvement in top sales in China and Europe,

“After 6-8 weeks of a falling market and being in the doldrums it has got to a point where we represented better value and they are starting to shift tops at the other end.

“That’s normal for this time of the year, if that business doesn’t start to flow through in October and November then you are generally in for a pretty tough year,” he said.

“They are certainly starting to shift tops and the price of tops has gone up a bit.

“We’ve got very small selections still and I think generally speaking the industry is a bit worried about how much wool is actually available this season between now and Christmas,” Mr Lamb said.

“So you’ve got a coming together of a little bit more demand with moderate at best offerings and you get a good market.”

Retailers wanting to place garment orders for the northern winter next year flows through into top orders for production in the next 3-4 months, he said.

“Once they get an eye on retail sales this coming winter, they will start thinking about next season.

“I don’t think it is a silver bullet or anything, but there are just slightly better trading conditions than what we had a month ago,” Mr Lamb said.

“It is probably a little bit over-cooked this week, but we have moved up to another level.”

Despite this week’s price rises, Mr Lamb said there were mixed reports on how the market would be post-Christmas.

“The negative reports are focussing on the conditions in China and general economically, and the better reports on the market are focussing on the lack of supply.

“At this stage it is too far out to say, but we’ve definitely come off those bottom prices of three weeks ago I think they are gone for now.”

Click here for the AWEX Micron Price Guides from Landmark.

Source: AWEX, Landmark and Techwool Trading.

HAVE YOUR SAY

Your email address will not be published.

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!