Markets

Wool prices strengthen further with lower offering and fresh Chinese demand

Sheep Central, May 27, 2016

Wool sales Landmark1 MelbourneWOOL prices improved further this week, helped by a lower offering and fresh demand.

AWEX senior market analyst Lionel Plunkett said the benchmark AWEX Eastern Market Indicator firmed 6 cents over the two days of selling to 1297c/kg clean.

“The EMI is now only 3 cents shy of the 1300 cent level (1297 cents) and is at its highest level in nine months.

“Just under 30,000 bales were offered nationally for the week making it the second smallest series for the season.”

The EMI lifted 4 cents in $US terms to US945 cents with the Australial-US dollar exchange rate at 72.10 cents. Brokers passed in 5.3 per cent of the 29,403 bale offering.

Mr Plunkett said a non-sale week in Fremantle contributed to the reduced offering.

“Wednesday was initially fairly flat and only minor movements were recorded.

“The better types remained the focus and lower spec types were fairly patchy, particularly in the finer microns where there were larger quantities,” he said.

“Thursday opened up on a more positive footing and continued to improve over the day.

“More consistent results were evident and discounting was reduced, and the final hour resulted in strong completion to close out the sale.”

Mr Plunkett said week-on-week results for Merino fleece ranged between unchanged and 10 cents higher with the mid-microns enjoying the strongest competition.

“The smallest offering of Merino skirtings for the season generally followed the movements in the fleece market this week, finishing the week 10 to 20 cents higher than when compared to the previous sale.

“The second day of selling saw a noticeable reduction in the discounts applied to shorter/faultier lots, closing the gap between these and the better style/spec lots,” he said.

A limited offering of crossbreds added to recent gains, rising 10 to 20 cents for the week, Mr Plunkett said.

AWI predicts strong market to continue

Australian Wool Innovation’s weekly market report said unlike the previous couple of sales, this week’s purchasing was dominated by the nation’s largest traders and forward buyers.

“The Chinese indent operators were still in the market and showing high interest and providing stiff competition, but this week the traders decided they needed to cover off sales and add inventory to their accounts.”

AWI said with Fremantle back to selling next wek with the Sydney and Melbourne centres, the national offering of just over 33,466 bales is highly unlikely to arrest the current strengthening of the market as witnessed at the very end of this week.

“Prices on all wool types are slowly building momentum and placing buying pressure on exporters as the supply dwindles.

“As RSA— South Africa– heads into its almost two month recess and NZ and South America not hitting their peak volume seasons yet, much of the global attention will be on supply out of Australia, as well as the Chinese domestic clip,” AWI said.

“It will come as no surprise to see a very strong June selling period in Australia, given there are no global dramas or adverse exchange rate movements.”

Sources: AWEX, AWI

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