The Australian wool market experienced significant losses for a second successive week despite a weaker local currency this week.
The Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) lost 54 cents (2.6%) for the week to close on 2,013 cents per kilo clean on Thursday 27 September. This was the largest fall in the EMI since it lost 62 cents in July. In US dollar terms, the EMI fell by 39 cents (2.6%) to finish at 1,461 US cents.
The Australian dollar against the US dollar finished 0.27 cents (0.4%) lower to close at 72.33 US cents on Thursday, after strengthening slightly last week.
The total national offering was 32,985 bales, compared with 35,630 bales last week. The clearance rate this week was 87.5% as sellers reacted to the fall in the market with a high national pass-in rate of 12.5%. This rose to 19.5% on Wednesday, when the pass-in rate in Fremantle was 47.4% as the Western Market Indicator (WMI) fell by 74 cents.
Sales were held in Melbourne on Tuesday 25 September, at all three selling centres on Wednesday 26 September, and at Sydney and Fremantle on Thursday 27 September.
On Tuesday, the EMI fell by 17 cents to 2,050 n cents, and in US dollar terms declined by 16 cents to 1,484 US cents. On Wednesday, the EMI dropped by a further 27 cents to 2,023 cents and in US dollar terms decreased by 13 cents to 1,471 US cents. On Thursday the EMI fell by 10 cents to 2,013 cents and in US dollar terms also dropped by 10 cents to 1,461 US cents.
Melbourne sold in an unusual pattern, with sales on Tuesday and Wednesday due to a Friday public holiday celebrating the AFL Grand Final. This meant Melbourne opened proceedings,
selling in isolation on Tuesday. AWEX reported that the market opened with discounts from the opening lot. Prices continued to fall as the sale progressed, as buyers became increasingly selective with their purchases.
Sydney and Fremantle resumed sales on Wednesday and quickly realised the losses experienced in Melbourne, and further price reductions were then felt in all three centres. The Western region was the hardest hit, resulting in the WMI falling by 74 cents for the day.
Sydney recorded more losses on the final day, but Fremantle managed to remain steady, even recording small price increases in selected microns.
By the end of the week prices had fallen nationally by 50 to 90 cents when compared to the previous week, with the losses felt across all microns.
Analysts said that it was a very mixed market, as could be seen from the wide fluctuations in the closing average indicator values between days and regions. Trade reports also indicated that there were significant differences again between demand for the better types and lesser types.
Among the average closing AWEX Micron Price Guides (MPGs) for the Merino types, price movements were least at the fine end, where there was strong demand from Europe. 16.5 microns fell by 58 cents (1.9%); 17 microns was down by 40 cents (1.4%); 17.5 microns declined by 65 cents (2.3%); 18 microns decreased by 73 cents (2.7%); 18.5 microns fell by 72 cents (2.8%); 19 microns was down by 74 cents (3.1%); 19.5 microns lost 76 cents (3.3%); 20 microns decreased by 73 cents (3.2%); 21 microns fell by 62 cents (2.8%); and 22 microns declined by 62 cents (2.8%).
The skirting market suffered similar corrections to the fleece types. Prices generally fell by 60 to 80 cents, with wools carrying more than 4% vegetable matter most affected by the falling market.
The crossbreds also lost ground for the week, but not to the same extent as their Merino cousins. The losses were generally 20 to 40 cents. Among the national AWEX average MPGs for the crossbred types, 26 microns lost 32 cents (2.2%).
The oddment sector was the poorest performer for the week. A limited selection struggled to attract buyer support and prices were generally discounted by over 100 cents.
Despite the fall in the market, analysts said those who sold wool did very well, with the total value of the wool sold this week at AU$69.3m (AU$2,445 per bale). It took the season total to AU$828.6m (AU$2,330 per bale). The average value per bale was AU$1,827 in the corresponding week last season. Buyers for China were dominant, with support from buyers for Europe and India.
The national offering continues to increase, but the volumes forecast for the next three weeks are still 4.2% lower than in the same period last year, with 42,546 bales forecast for next week (Week 14), followed by 35,396 bales in Week 15 and 38,540 bales in Week 16.
