The Australian wool market saw a further decline this week, though the downward slide was not as sharp as last week’s dramatic falls, and overall the market had a more settled week.
The Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) fell by 20 cents (1.1%) for the week to close on 1,854 cents per kilo clean on Thursday 1 November. In US dollar terms, the EMI was down by 5 cents (0.4%) to finish on 1,322 US cents.
The Australian dollar against the US dollar finished 0.53 cents (0.7%) higher to close the week at 71.30 US cents on Thursday.
In local currency terms, over the last three weeks the EMI has dropped by 169 cents (8.4%) and has now lost 262 cents from the record achieved in mid-August – a reduction of 12%.
However, analysts noted that the EMI and Western Market Indicator (WMI) are, respectively, 231 cents (14.2%) and 331 cents (19.8%) greater than at the end of Week 18 last season when the EMI was 1,623 cents.
The total national offering increased slightly to 35,784 bales this week, compared with 33,371 bales last week. The clearance rate this week was 83.5%, compared with 76.5% last week, as the fall in prices was again met with firm seller resistance.
The New Zealand Merino Company offered 660 bales in Melbourne on Wednesday, with a clearance rate of 64.2%.
Sales were held at all three selling centres on Wednesday 31 October and Thursday 1 November. On Wednesday the market got away to a better start when compared with the two previous weeks, but the EMI saw a significant easing on Thursday. On Wednesday the EMI fell by 6 cents to 1,868 cents and in US dollar terms declined by 4 cents to 1,323 US cents. On Thursday the EMI decreased by a further 14 cents to 1,854 cents and in US dollar terms dropped by 1 cent to 1,322 US cents.
AWEX reported that buyers were again tentative in their bidding this week, and as a result the market struggled to find a solid basis. The lack of buyer confidence, combined with an ever-increasing quantity of lower yielding, lower strength wool, resulted in losses across the board. By the end of the sale the prices being realised were generally 15 to 40 cents below those achieved at the previous sale.
Changes in the market were more evenly distributed over the Merino micron ranges this week, with falls of around 1% in most of the average AWEX Micron Price Guides (MPGs). The movements were as follows:
16.5 microns fell by 17 cents (0.6%); 17 microns was down by 30 cents (1.2%); 17.5 microns declined by 26 cents (1%); 18 microns decreased by 30 cents (1.3%); 18.5 microns fell by 27 cents (1.2%); 19 microns was down by 26 cents (1.2%); 19.5 microns lost 28 cents (1.3%); 20 microns decreased by 25 cents (1.2%); 21 microns declined by 26 cents (1.2%); 22 microns fell by 12 cents (0.6%); and 23 microns was down by 6 cents (0.3%).
The skirtings were the best performing type this week, managing to record modest gains for the week of between 5 and 10 cents. Wools carrying less than 2% vegetable matter
attracted the most competition and the largest gains.
The crossbreds had a week of mixed results, with prices rising slightly in the South and falling slightly in the North. Among the national AWEX average MPGs for the crossbred types, 28 microns declined by 8 cents (1%); 30 microns decreased by 5 cents (0.7%); and 32 microns rose by 10 cents (2.1%).
The oddments continued their steep downward path. Locks, stains and crutchings generally fell by a further 40 to 100 cents, pushing the three carding indicators down by an average of 71 cents. Over the course of the previous six sales, the Merino carding indicators have fallen by an average of 468 cents.
AWEX reported that the total value of the wool sold this week was AU$60.9m (AU$2,072 per bale), taking the season total to AU$1.163bn (AU$2,343 per bale). Buyers for China were dominant, with support from buyers for Europe and India.
Quantities are forecast to remain very similar next week (Week 19), with a projection of 35,696 bales. The forecast for Week 20 is 38,330 bales and Week 21 36,050 bales.
Overall the offerings for the next three weeks are forecast to be 22% lower than in the same period last season. This would mean that the total for the season up to Week 21 would be 16% lower than up to the corresponding week last season.
Analysts noted that concerns around supply are intensifying, especially given that November is normally the peak month for wool production in Australia. The Australian Wool Production Forecasting Committee will have its next meeting in the middle of this month.
