Markets

Wool prices rise for Australia’s smallest bale offering at auction in four years

Sheep Central, June 24, 2016

Wool sales Landmark1 Melbourne

With the $A-US exchange rate appreciating to US75.21 during the week, the AWEX Eastern Market Indicator closed 6 cents higher on 1285 cents clean.

Brokers passed in 6.5 percent of the 22,108-bale offering with the EMI in US dollars increased around US21 cents, 2.2 percent higher, to 966 cents.

AWEX senior market analyst Lionel Plunkett said the selection in the Merino fleece catalogue was fairly mixed in the second last sale for the 2015/16 season. Low vegetable matter and best style types were in relatively short supply while the balance generally had favourable strength (Nkt) and position of break measurements, he said.

“Buying pressure continued to show in the medium and broader microns which added as much as 25 cents clean over the two days on the back of scarce quantity.

“Most of the volume was in the finer microns and these barely maintained the price levels of the previous sale,” Mr Plunkett said.

Selected better types still attracted good competition whilst part tender types received irregular support.”

The smallest offering of Merino skirtings in twelve months were well-supported during the sale and were generally in line with the previous week. Mr Plunkett said as with the fleece sector, the few broader microns on offer came under most scrutiny.

“Crossbreds continued to trend lower, easing 5 to 10 cents this week.

“Only 2216 bales of oddment types were offered this week, making it one of the smallest selections on record for the category,” he said. Despite the limited numbers the Merino carding indicators finished 5 to 10 cents lower.

Further price rises impeded by exchange rate

The AWI weekly market report said wool prices this week were impeded from registering much stronger gains by the ever strengthening Australian dollar against the US dollar.

“As a result, some price resistance was being reported, as overseas buyers appeared to be faltering in their intent to follow the market up.”

AWI said for the second consecutive week, the overwhelmingly popular consensus of a cheaper market prior to selling was proven erroneous.

“Whilst the reported low volume of fresh sales and the disadvantageous rates of currency exchange would normally drive prices downwards, the extremely low global supply and outstanding uncovered open positions quickly gained ascendency in determining market direction.

“Improving local returns in general were achieved, with a willingness of grower sellers to pass in their wool if realistic reserves had not been met, thus helping the market retain its strength,” the AWI report said.

“In small offerings this can be a successful strategy with little or low risk.”

AWI said next week’s offering of just over 32,000 bales at the three selling centres “should see the market hang on well enough.”

“The unexpected stronger market this week and the stability witnessed at the close of selling also points to a good close to the 2015/16 wool selling season.

“The potential to see a substantially weaker $A due to outcomes in Britain is tipped to most likely see an improving wool market scene locally and continue to push the EMI towards the 1300ac/clean kg mark<” AWI said.

“Conversely a stronger $A will hamper the price improvement capacity somewhat.”

Click here for the latest AWEX Micron Price Guides.

Sources: AWEX, AWI.

 

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