The Australian wool market continued its recent decline this week with another sharp drop as all diameters and wool types suffered.
The Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) fell by 78 cents (4.2%) for the week to close on 1,776 cents per kilo clean on Thursday 8 November. In US dollar terms, the EMI was down by 29 cents (2.2%) this week to finish on 1,293 US cents.
The Australian dollar against the US dollar finished 1.44 cents (2%) higher to close at 72.74 US cents on Thursday. Analysts said that this did not help the market in a difficult week.
The EMI has now fallen for four consecutive weeks, losing a total of 247
cents over this period in local currency terms. The EMI is now 340 cents below its August peak of 2,116 cents.
This week’s national offering was 32,189 bales, compared with 35,124 bales last week. The offering was the smallest three centre offering of the season, and 10,657 less than the 42,846 bales offered in the corresponding week last season, when the EMI was 1,681 cents.
The total national offering so far this season is now 15.2% lower compared with the same period last season.
As in previous weeks, the fall in price was met with firm seller resistance this week, with a clearance rate of 79.05%.
The New Zealand Merino Company also offered 660 bales in Melbourne on Wednesday, with a clearance rate of 64.2%.
Analysts said that the movements in the market this week were disappointing after the steadier performance last week.
Sales were held at all three selling centres on Wednesday 7 November and Thursday 8 November. The market slipped significantly on Wednesday, before settling to some extent on Thursday. On Wednesday, the EMI declined by 59 cents to 1,795 cents and in US dollar terms fell by 23 cents to 1,299 US cents. On Thursday the EMI dropped by a further 19 cents to 1,776 cents and in US dollar terms decreased by an additional 6 cents to 1,293 US cents.
All diameters and types were affected. Falls among the Merinos varied over the two days, but without displaying any consistent pattern. Falls among the crossbreds were also varied.
AWEX reported that when the sale opened, it was immediately apparent that there was a distinct lack of buyer confidence. Good style wool, with favourable additional measurement results, were attracting spirited bidding and as a result were not too heavily discounted. However, inferior style
wool, wool carrying faults and wool with less favourable additional measurement results were continually discounted as the sale progressed.
Among the average AWEX Micron Price Guides (MPGs) for the Merino types,
16.5 microns fell by 113 cents (4.3%); 17 microns was down by 103 cents (4%); 17.5 microns declined by 64 cents (2.6%); 18 microns decreased by 97 cents (4.1%); 18.5 microns fell by 84 cents (3.7%); 19 microns was down by 122 cents (5.5%); 19.5 microns lost 114 cents (5.2%); 20 microns decreased by 86 cents (4%); 21 microns declined by 76 cents (3.6%); 22 microns fell by 69 cents (3.2%); and 23 microns was down by 71 cents (3.3%).
The crossbreds also fell this week, but not to the same extent as the Merino types. Among the national AWEX average MPGs for the crossbred types, 28 microns declined by 30 cents (3.9%); 30 microns decreased by 28 cents (4.1%); and 32 microns stayed firm.
Meanwhile, the oddment sector continued its dramatic fall. Prices for locks, stains and crutchings were generally reduced by a further 30 to 90 cents, pushing the average AWEX Merino Carding Indicator down by another 62 cents (5.7%).
AWEX reported that the total value of the wool sold this week was AU$48.9m (AU$1,921 per bale), taking the season total to AU$1.2bn (AU$2,343 per bale). Buyers for China were dominant, with support from buyers for Italy, India and Korea.
A larger national offering is forecast for next week (Week 20), at 39,883 bales, with the projection for Week 21 35,446 bales and Week 22 38,240 bales.
However, overall the offerings for the next three weeks are forecast to be 22.8% lower than in the same period last season. This would mean that the total for the season up to Week 22 would be 16.7% lower than up to the corresponding week last season.
The Australian Wool Production Forecasting Committee will meet on Wednesday 14 November and issue their updated forecast on Friday 16 November.
