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Wool prices slip lower as premium 1PP bales feature in Sydney

Sheep Central, May 14, 2021

Inspecting one of the Hillcreston-Pine Hill 1PP bales in Sydney were, from left, wool buyers Murray Bragg, New England Wool; Peter Rookyard, Watswool, and; Stuart Clayton, Modiano Australia.

AUSTRALIAN wool prices generally fell slightly at auctions this week, with crossbred wool values dropping by up to 40 cents, as the national offering increased by 2213 bales to 49,771 bales.

AWEX said the larger offering attracted strong support, from a good spread of exporters, pushing  the passed-in rate down to 12 percent, 3.3pc lower than the previous week.

The individual merino Micron Price Guides (MPGs) across the country moved between +14 and -27 cents, AWEX said.

“These movements combined with those in the other sectors, pushed the AWEX Eastern Market Indicator (EMI) down by 13 cents for the series, closing the week at 1306 cents/kg clean, a marginal 1pc decrease.”

AWEX said there were notably 10 lots assessed as 1PP in Sydney this week. The last time 10 1PP lots were certified in one week, was back in October 2013.

“1PP is the highest type available to wool grown in Australia.

“The approval criteria for 1PP certification is stringent and is carried out by a regional 1PP certification panel,” AWEX said.

Trade sources told Sheep Central the IPP bales all came from the New South Wales shedded Merino operation, Hillcreston-Pine Hill, and were classed by Murray Picker. Of the 10 1PP bales, eight were withdrawn from the auction and two were sold; a 14.3 micron bale at 3333c/kg greasy and a 14.5 bale at 3080c/kg greasy.

The highest price at auction this week was achieved by another Hillcreston-Pine Hill bale, a 12.8 micron bale with a tensile strength of 28 Newtons/kilotex. The bale sold for 4900c/kg greasy cents to be the highest price of the current season.

AWEX said crossbred wools did not perform as well as the Merinos, recording the largest falls (in percentage terms) for the second week in a row. The broader microns were most affected, this was reflected in the MPGs for 28 to 32 micron wools, which dropped between 22 and 40 cents.

Buyers hesitate at larger offerings – AWI

Australian Wool Innovation trade consultant Scott Carmody said the cautious approach to the week from buyers arose from trepidation that the unseasonally large quantities being offered could struggle to be absorbed, given the detrimental foreign exchange (forex) rates available and the tight access to finance being managed.

“Additionally the current selection is extremely diverse, with many lots in the harder-to-place wool type categories, predominantly due to the heavier vegetable matter at present.”

He said the large quantity of around 50,000 bales combined with the A$:US$ forex rates — over US78.5 cents as selling was underway for the first two days — held market prospects in check for the week.

“Grower sellers subsequently passed in 12pc and the forex plummeted 2.1pc overnight Wednesday.

“These actions cumulatively assisted in the taming of the negativity to some degree and seeing the market post small gains at the close of selling at both Fremantle on Wednesday and the Thursday Melbourne-only sale,” Mr Carmody said.

“In a week that saw wool prices defying expectations again, it was Chinese interests that continued to provide demand.

“Chinese top makers, processors and traders were all active,” Mr Carmody said.

“Limited competition came from Italy for the few better superfine clips and some stronger European top maker purchasing was evident.

“Small pockets of Indian buying was also observed.”

Next week’s national offering decreases. There is currently 45,929 bales on offer in Sydney, Melbourne and Fremantle, with only two selling days required.

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