The Australian wool market experienced sharp corrections this week as last week’s uplift proved to be short lived.
The Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) fell by 53 cents (2.6%) for the week to close on 1,970 cents per kilo clean on Thursday 18 October.
The EMI has now fallen in four of the last five weeks, losing a total of 124 cents over that
period. It is now 146 cents below the record of 2,116 cents it achieved in August.
AWEX said that currency movement could have contributed to some of the market movement this week. The Australian dollar against the US dollar finished 0.59 cents (0.8%) higher to close at 71.31 US cents on Thursday.
In US dollar terms, the EMI was down by 25 cents (1.7%) to finish on 1,405 US cents.
Analysts noted that reports from other commodity markets indicated that wool was not alone in coming under pressure during the week.
The total national offering this week was 36,084 bales, compared with 32,072 bales last week. The national offerings so far this season are 13.3% down compared to the same period last season. The clearance rate this week was 80.4%.
Sales were held at all three selling centres on Wednesday 17 October and Thursday 18 October. On Wednesday, the EMI fell by 32 cents to 1,991 cents and in US dollar terms declined by 9 cents to 1,421 US cents. On Thursday, the EMI decreased by a further 21 cents to 1,970 cents and in US dollar terms dropped by an additional 16 cents to 1,405 US cents.
There were falls across all micron ranges and wool types, which analysts said reflected recent reports of difficulties in trading. The falls were greatest at the fine end of the Merinos, at the coarse end of the crossbreds and among the oddments.
Declines among the Merino types became smaller as the diameter increased, and were least for the medium and broad types. Wools of 19 microns and finer suffered the largest falls, in particular any wool with poor additional measurements, due to the over supply of these types.
Among the average AWEX Micron Price Guides (MPGs) for the Merino fleece types,
16.5 microns fell by 121 cents (4.1%); 17 microns was down by 94 cents (3.3%); 17.5 microns declined by 67 cents (2.5%); 18 microns decreased by 68 cents (2.6%); 18.5 microns fell by 82 cents (3.3%); 19 microns was down by 62 cents (2.6%); 19.5 microns lost 50 cents (2.2%); 20 microns decreased by 38 cents (1.7%); 21 microns declined by 43 cents (1.9%); 22 microns fell by 59 cents (2.6%); 23 microns was down by 40 cents (1.8%); and 24 microns declined by 45 cents (2.3%).
Skirtings tracked a similar path to the fleece types, with general losses of 80 to 100 cents. 18.5 microns and finer were most affected.
The crossbreds were the best performing sector, only losing 10 to 30 cents. Among the national AWEX average MPGs for the crossbred types, 25 microns fell by 19 cents (1.1%); 26 microns lost 58 cents (4.2%); 28 microns declined by 14 cents (1.6%); 30 microns decreased by 10 cents (1.4%); and 32 microns fell by 25 cents (5%).
The oddment sector suffered large losses this week. Locks, stains and crutchings were generally reduced by 80 to 120 cents, pushing the average AWEX Merino Carding Indicator down by 100 cents (7.2%) in the largest price movement of the week.
On a positive note, AWEX reported that the total amount of wool sold for the season so far went past AU$1bn (at an average of AU$2,372 per bale).
This was the quickest the billion-dollar mark has been reached since AWEX started compiling this information in 1995. It was one sale faster than last season, when it was achieved in Week 17, and five sales quicker than the 2016/17 season when it took 21 weeks to reach the milestone.
The total value of the wool sold was this week was AU$68m (AU$2,339 per bale). Buyers for China were dominant, with support from buyers for Europe and India.
The offerings for the next three weeks are expected to be 15.1% less than in the same period last year. The offering for next week (Week 17) is 38,702 bales, followed by Week 18 at 38,356 bales and Week 19 34,891 bales.
