The Australian wool market suffered corrections this week and was heavily influenced by a stronger local currency.
The Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) lost 27 cents (1.3%) for the week to close on 2,067 cents per kilo clean on Thursday 20 September. In US dollar terms, the EMI fell by 3 cents (0.2%) to 1,500 US cents.
The Australian dollar against the US dollar finished 0.60 cents (0.8%) higher to close at 72.60 cents on Thursday. It was the first upward movement in the closing exchange rate since the wool market resumed after the mid-year recess in August.
This week’s total national offering was 35,630 bales, compared with 34,064 bales last week, resulting in a clearance rate of 91%. In the West on Wednesday the clearance rate was 71.1% as the Western Market Indicator fell by 32 cents.
AWEX reported that a major concern of industry stakeholders is production forecasts for this season, due in part to the dry conditions being felt in many parts of the country. When compared to the corresponding sale of the previous season, the national offering is currently 13.3% lower. The New Zealand Merino Company offered 419 bales in Melbourne on Wednesday, with a clearance rate of 83.5%.
Sales were held this week at all three selling centres on Wednesday 19 September and Thursday 20 September. On Wednesday the EMI fell by 13 cents to 2,081 cents but in US dollar terms rose by 3 cents to US 1,506 cents. On Thursday the EMI declined by a further 14 cents to 2,067 cents and in US dollar terms fell by 6 cents to 1,500 US cents.
Prices were discounted from the opening lot and slowly but noticeably deteriorated as the
sale progressed. By the final hammer the price levels were generally 10 to 50 cents below those achieved in the previous week’s sale.
AWEX reported that hardest hit in the falling market were the lower yielding, inferior style types and those possessing unfavourable length and strength results. Conversely, a limited selection of better style wools with low cvh results held up particularly well, recording very little change for the series.
The movements across the different selling centres were quite mixed with the changes varying from a drop of 9 cents in the South to 32 cents in the West (where all wools moved down) on Wednesday; and from a decline of 2 cents in the West to a fall of 20 cents in the South (where the fine wools were most affected) on Thursday.
Among the average AWEX Micron Price Guides (MPGs) for the Merino types, 16.5 microns fell by 32 cents (1%); 17 microns was down by 35 cents (1.2%); 17.5 microns declined by 9 cents (0.3%); 18 microns decreased by 19 cents (0.7%); 18.5 microns fell by 24 cents (0.9%); 19 microns was down by 29 cents (1.2%); 19.5 microns lost 24 cents (1%); 20 microns decreased by 30 cents (1.3%); 21 microns fell by 35 cents (1.5%); 22 microns declined by 28 cents (1.2%); 23 microns was down by 28 cents (1.2%) and 24 microns decreased by 13 cents (0.6%).
Merino skirtings followed a similar path to the fleece types and losses were felt across all types and descriptions. Prices were generally discounted by 20 to 50 cents, with a large selection of wools carrying more than 4.0% vegetable matter (vm) most affected. A limited offering of skirtings with less than 2.0% vm attracted strong demand and were generally unchanged.
The crossbred sector performed with mixed results. General losses of between 10 to 60 cents were recorded in the 25 to 28 micron range, whilst 32 microns managed a 10 cent increase. Among the national AWEX average MPGs for the crossbred types, 26 microns lost 41 cents (2.7%); 28 microns was down by 20 cents (2.1%); 30 microns increased by 1 cent (0.1%); and 32 microns gained 11 cents (2.2%).
The oddment market recorded general falls of 10 to 30 cents, the exception being a small selection of new season washing lambs (<0.3% vm). These wools were hotly contested and as a result were extreme.
AWEX reported that the total value of the wool sold this week was AU$79.6m (AU$2,505 per bale), taking the season total to AU$759.3m (AU$2,373 per bale). Buyers for China were dominant, with support from buyers for Europe and India.
Looking ahead, offerings for the next three weeks are expected to be 6.6% less than in the same period last year. The offering for next week (Week 13) – a designated Australian superfine sale – is 34,844 bales, followed by 37,895 bales for Week 14 and 34,621 bales for Week 15.