The Australian wool market experienced a dramatic increase this week, with currency movement, a reduced offering, and buyer concern over upcoming supply all contributing factors.
At the second week of sales following the annual mid-year recess, the Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) lifted by 126 cents (6.3%) for the week to close on 2,116 cents per kilo clean on Thursday 16 August. The EMI easily surpassed its previous high of 2,073 cents, set in June. This week’s increase was 46 cents greater than the highest week-on-week change last season, and was the largest weekly increase since 2002.
In US dollar terms, the EMI rose by 57 cents (3.9%) to 1,537 US cents. It was a week of unsettled global currency markets, highlighted by the fall in the Turkish lira. The Australian dollar against the US dollar finished 1.66 cents (2.2%) lower to close at 72.75 cents on Thursday.
Sales were held at all three selling centres on Wednesday 15 August, and at Sydney and Melbourne on Thursday 16 August. On Wednesday the EMI lifted by 99 cents to 2,089 cents, the largest daily rise in the EMI since 2002. The WMI rose by 121 cents. In US dollar terms the EMI rose by 27 cents to 1,507 US cents.
On Thursday the EMI lifted by 27 cents to 2,116 cents, and in US dollar terms increased by 30 cents to 1,537 US cents.
Quantities were reduced this week, with 36,302 bales on offer nationally, compared with 49,415 bales last week. The clearance rate was 98.5% – the highest since the 98.7% in the second week of November last year, when the EMI rose by 58 cents to 1,681 cents.
AWEX reported that from the opening lot, buyer competition was intense this week. On Wednesday, prices across the nation increased by an average of 110 to 160 cents. The rises were realised across all microns and over the entire facet of types. Some small faults were increasingly overlooked, as buyers attempted to secure meaningful quantity in the rapidly rising market.
On Thursday the market was more subdued, although it continued to track upward, just not at the same frenetic pace that was witnessed the previous day. All types and descriptions generally rose by another 20 to 50 cents.
The regional market indicators, and the AWEX average micron price guides (MPGs) for 18 through to 21 microns, climbed to unprecedented levels at all three selling centres this week.
Among the national AWEX average MPGs for the Merino types, 16.5 microns rose by 128 cents (4.2%); 17 microns was up by 183 cents (6.5%); 17.5 microns climbed by 186 cents (7%); 18 microns increased by 192 cents (7.7%); 18.5 microns lifted by 168 cents (7%); 19 microns was up by 152 cents (6.6%); 19.5 microns gained 153 cents (6.8%); 20 microns increased by 142 cents (6.3%); 21 microns climbed by 134 cents (6%); 22 microns rose by 149 cents (6.8%); and 23 microns was up by 113 cents (5.1%).
The skirtings followed a similar path to the fleece types, with prices generally rising by 50 to 100 cents for the week.
The crossbred sector also posted significant gains of 60 to 90 cents. Among the national AWEX average MPGs for the crossbred types, 26 microns lifted by 76 cents (5.2%); 28 microns was up by 85 cents (9.7%); 30 microns increased by 62 cents (9.4%); and 32 microns gained 62 cents (13.6%). A limited offering of oddments generally rose by 40 to 80 cents.
AWEX reported that the total value of the wool sold this week was US$87.3m (US$2,441 per bale), taking the season total to US$351.9m, compared with US$308.6m at the end of the corresponding week last season.
Buyers for China were particularly strong, with support from buyers for India and Europe.
Next week (Week 8), Fremantle has a recess, which has contributed to a further reduction in the national offering. Currently, there are 29,813 bales on offer in Sydney and Melbourne. The annual Wool Week will take place during the same week. In Week 9 – a designated Australian superfine sale – the offering is forecast to be 34,405 bales, and in Week 10 38,890 bales.
