AUSTRALIA’S wool price benchmark suffered its fourth consecutive week of losses this week.
The Australian Wool Exchange said the market opened solidly on the first day, with strong demand on good style, low vegetable matter wool helping to push all Merino fleece Micron Price Guides (MPGs) up by between 4 and 30 cents.
“Some selected pockets of the market recorded losses, which restricted the AWEX Eastern Market Indicator (EMI) to a 4-cent rise.
“On the second day of selling, buyer sentiment eased off slightly, resulting in a noticeable softening in bidding intensity,” AWEX said.
“By the end of the day, the Merino fleece MPGs had dropped by between 5 and 27 cents, with only the 17.5 micron MPG in the south posting an increase of 4 cents and the EMI fell by 10 cents for the day.
“The EMI closed the week at 1369 cents, an overall drop of 6 cents for the series.”
The national offering was 42,737 bales, with only two selling days required, and brokers passed in 9.7 percent of the offering.
Heavy rains have impacted wool quality
AWEX said heavy rains across some parts of the country have resulted in an increase in the amount of unscourable colour and water colour being offered.
“This is best highlighted by studying the amount of colour in the pieces and bellies this week, as this is where the majority of the colour ends up when the fleeces are skirted.
“In the Eastern regions, over 46pc of the skirting offering contained an AWEX-ID colour qualify of H1, H2, H3 or a water colour qualifier of N1, N2 or N3,” AWEX said.
“This was the highest figure in over 10 years.
“This (national) 46pc was driven by the northern region where this figure was nearly 76pc.”
Erratic price movements at auctions – AWI
Australian Wool Innovation trade consultant Scott Carmody said erratic price behaviour featured this week at the Australian wool auctions.
“The week’s daily price movements on Merino fleece wools acted in complete juxtaposition to last week by being significantly dearer on the first day and then significantly cheaper on the final day.
“Despite this volatility, values by the close of selling finished within 10ac above or below the established levels,” he said.
“All other wool types on offer traded barely firm then trended downward to be 5 to 15ac cheaper, with crossbred wools the main casualty.”
He said the EMI close at 1369 ac/clean kg represented a fall of 0.4pc.
“In US$ terms, the EMI went the other way to be US8 cents higher at US1037c/kg clean, which was a forex forced increase.”
He said the Fremantle selling centre produced the best results, adding 3 cents to the Western Market Indicator (WMI) to move positively to 1421c/kg clean. Nationally, just 86.1pc of all wool eventually offered flowed to the trade and 6pc was withdrawn by growers prior to sale.
South African Foot and Mouth Disease outbreak uncertainty
“The bullish commencement to the selling week came about due to uncertainty surrounding the potential consequences of a foot and mouth outbreak in South Africa.
“The temporary break of supply from that nation led to some purchasing pressure transfer to Australia,” he said.
“The South African industry decided to eliminate risk for the time being by postponing their auction sales for this week.
“Robust biosecurity protocols and risk mitigating measures in that country should enable a quick return to normal trade,” Mr Carmody said.
He said foreign exchange rates were the primary factor that depressed wool prices on the final day of selling.
“The Australian dollar strengthened remarkably swiftly.
“The Euro in particular moved almost 4pc lower from the end of last week,” Mr Carmody said.
“The A$ is at the strongest level against the Euro since April 2017, highlighting the economic impacts being felt in Europe by the Ukraine conflict.
“This forced the cost of wool for those buying in Euro 3.3pc higher,” he said.
“In contrast, the A$ was at today’s equivalent rates against the US$ and China’s CNY just 10 months ago.”
Next week is the final sale before the one-week Easter recess. Due to the Good Friday public holiday, all centres are restricted to two selling days (Tuesday/Wednesday). Currently, 48,413 bales are expected to be offered.
Click here for the latest AWEX Micron Price Guides.
Sources: AWEX, AWI.