AUSTRALIAN wool growers have continued to withdraw wool from the added Week 42 sales tomorrow, consistent with the high withdrawal trend of recent auctions.
The addition of the extra sale by the AWEX National Auction Selling Committee has been opposed by several buyers, exporters and their international clients, but supported by major brokers wanting to offer growers’ wool and exporters wanting to buy.
A week ago, the forecast offering for the Week 42 auctions in Fremantle, Sydney and Melbourne tomorrow was 26,006 bales, but this dropped to an estimate of 21,523 by 9am today.
By 1pm today, 21,409 bales had been catalogued – a 17.7 percent drop from last week — and brokers are still able to withdraw lots up to the sale’s starting time of 11am tomorrow.
Last week, brokers offered 29,495 bales, after withdrawing 33.9pc of the Week 41 estimate made the week prior of 44,612 bales, and brokers passed in 13.3pc during auctions.
And in the week before, Week 40, when the AWEX Eastern Market Indicator crashed 155 cents, the early estimate of 45,810 bales shrunk by 17.8pc to 37,713 bales offered, and 44.9pc of these were passed in.
A Sheep Central survey of Australian wool exporters today indicated that several maintained their opposition to the extra Week 42 sale this week, and had supported bringing forward the annual three-week July recess into April, but this was opposed by brokers concerned about the market competition issues with changing sale schedules. Some exporters said they will not participate in the sale, while others will be participating, although most have already filled orders for March-April shipment and would be buying now for May shipment.
All the major brokers have supported this week’s extra sale and are under increasing storage cost pressures to move wool after the recent high withdrawal and passed-in rates.
Australian Merino Exports director Chris Kelly said his company supported the Week 42 sale when the future of auction sales during the COVID-19 pandemic was uncertain, although he would have supported bringing forward the three-week July recess if the industry had supported it.
Mr Kelly said his preference is for continuing the open cry auctions, but he also supported the use of online auctions if necessary and participated in a recent Zoom trial.
“Zoom to us is very similar – it allows us to construct batches and lots as we do in the sale room, which is what we want.
“If we have to close the auction for whatever reason, Zoom is a good back-up.”
Tianyu Wool’s global purchasing manager Angus Hooke said as long the trade is able to ship wool and growers were able to offer it, “there is a marketplace for it,” and auction sales should continue.
Week 42 sale added, but market intervention not warranted
In his most recent newsletter last week, National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said brokers have been communicating closely with their wool grower clients about market conditions and helping them reach decisions about offering wool in the current volatile and difficult market.
“The free market is performing as you would expect, with sellers responding to the changed conditions by reducing volumes on offer and buyers also adjusting.
“I don’t think that any form of market intervention, such as has been called for by some in the industry here in Australia and internationally, including suspension of auctions, is warranted,” he said.
“That is also the view of the vast majority of NCWSBA member companies, and NCWSBA has been lobbying for open-cry auctions to continue.”
Mr Wilcox said Wool Industries Australia, of which NCWSBA is an executive member, has reaffirmed its support of the free market and the continuation of wool auctions in Australia within the rules and protocols established for social distancing and hygiene during the COVID-19 outbreak. WIA communicated this position to the International Wool Textile Organisation, who has now circulated it to IWTO members, he said.
WIA reaffirms support for free enterprise principles
WIA chairman David Michell said that a meeting of WIA members on April 3 reaffirmed their support of the free enterprise principles that enable the continuation of exchange of ownership for Australian wool in these difficult times.
“Sellers expressed their desire to be able to sell if they choose and buyers, similarly, want the ability to buy if they choose.
“Therefore, there is no support to follow the example of other countries that have enacted pauses or cancellations of auctions.”
Mr Michell said the COVID-19 virus has prompted significant action by all WIA members that resulted in wool being classified as an essential industry that is encouraged to maintain its activities.
“It has also led to a review of the auction environment to minimise health risks, resulting in changes to location, participant layout and exclusion of non-essential personnel.
“It has also seen the acceleration of trials for alternative sale methods including remote, digital access,” Mr Michell said.
“These actions are all designed to enable safe and continued business activity in the Australian wool industry.
“The WIA members all support this direction while being intensely focussed on the welfare of all those actively involved. Their well-being is paramount.”