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Wool shipping delays and more bales lower prices

Sheep Central, February 11, 2022

LOGISTIC issues impacting buyer finance arrangements and a larger bale offering were blamed for a slump in the Australian wool auction market this week.

After four weeks of consecutive rises to start the 2022 calendar year, the Australian Wool Exchange said the market has been unable to continue its upward run.

AWEX said the recent rises encouraged more sellers to the market this week, pushing the national offering higher to 46,359 bales, 5868 more bales than last week.

“Compared to recent weeks, the offering failed to attract the same level of buyer support, resulting in price reductions across nearly all Merino fleece microns.

“By the end of the series, the individual Micron Price Guides (MPGs) for 17 micron through to 22.0 micron fleece had fallen by between 5 and 88 cents.”

AWEX said these falls, combined with losses in the skirting and crossbred sectors, pushed the AWEX Eastern Market Indicator (EMI) down by 27 cents to 1422c/kg clean.

“Understandably, the drop in prices pushed the passed-in rate higher, as sellers were reluctant to accept the lower prices on offer.

“By the end of the series the overall passed in rate was 17.4 percent, up 10.5pc from the previous week.”

AWEX said the first speciality superfine sale of the year was held in Sydney this week, although there was a quality superfine selection in all three centres. The highest prices achieved was 6600 cents for some 13 micron fleece in Melbourne and 5700 cents for a 13.3 micron fleece line in Sydney. In Fremantle, a line of 12.2 micron fleece wool sold for 5400 cents, the equal third highest price for the week.

AWEX said the oddments were the only sector to record an overall rise this week. The three Merino Carding Indicators (MC) rose by an average of 10 cents.

Logistic issues create buyer payment delays – AWI

Au str ali an Wool Innovation trade consultant Scott Carmody said although demand remains reasonably good and more consistent, wool prices came under pressure this week due to logistics factors.

“Port congestion and transport problems are causing shipping delays of up to a month now.

“This places pressure on buyer finances as most overseas payments to buyers are paid by an irrevocable letter of credit (L/C) which is executed to the bill of lading (B/L) date,” he said.

“That leaves buyers awaiting payment longer and in some instances prevents them participating fully at auction due to the prompt payment of auction purchases being mostly due in just one week.

“Alongside finance issues, the large volumes that are normal for this time of the season are also preventing prices rising further or even holding for the time being,” he said.

“The number of exporters trading wool is also lower than last year, with one significant global player not operating.

“The absence of this exporter takes away a bidder that has usually financed auction purchases within the offered volumes.”

Next week’s bale offering is set climb again, with 55,802 bales currently expected to be offered in Sydney, Fremantle and Melbourne. Melbourne also hosts a Tasmanian feature sale, consisting of 6310 bales.

Click here for the latest AWEX Micron Price Guides.

Sources – AWEX, AWI.

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