Australian Wool Auctions Witness Positive Trend
The Australian wool auction markets week ending February 9 witness return of a positive trend as sales accelerated significantly with most merino wool types on offer verging on a full 100ac clean/kg dearer by the close of selling, with some individual lots advancing 150 to 200ac. Crossbreds were by no means neglected either, as these wools all headed 50 to 70 ac higher.
In a staggering week of good fortune for wool growers who were selling, the Australian Wool Exchange-Eastern Market Indicator (AWEX EMI) gained 80ac clean/kg to close at 1818ac clean/kg, equalling the record level set in January of this year, Australian Wool Innovation Limited (AWI) said in its weekly ‘Wool Market’ report.
The key driver behind the week’s push in the market was new demand from China. Australian dollar exchange rate against all major currencies, particularly US dollar, was also a factor. The US dollar (USD) strengthened relative to the Australian dollar (AUD) by nearly 3 per cent. “The result was the EMI when expressed in USD rose by just 1.6 per cent in comparison with the 4.6 per cent rise in the AUD EMI. This situation certainly assisted those using USD to buy wool to keep in touch with the rising costs in AUD of wool at auction. The USD EMI concluded the week at 1420usc clean kg, a gain of 22usc for the week,” AWI report said.
While price rise during the week was widely expected amongst the trade, the velocity and magnitude of the gains were not forecast and surprised most. “It was common knowledge around the show floors pre-sale that new business had been written and indeed many orders remained unfulfilled, as exporters were reticent to expose themselves to an open short position. As the week progressed, and buyers’ stocks moved back into positive territory, some profit taking did occur and new orders were concluded mid-week, somewhat satisfying prompt demands,” the report said.
In a good offering ex Sydney of super fine and ultra fine types, the price rises were in many cases extraordinary. For those ultra fine types finer than 16.5 micron, gains of 200ac were commonplace. This led these wools to be up to 350ac clean/kg dearer over the past two weeks. All other super fine wools (16.6 to 18.5mic) showed gains of around the 100ac mark with the spinners and best top making types up to 150ac dearer.
In general, the merino fleece markets appreciated by around 60ac for all wools 18.6 to 20.2 micron, whilst a diminishing selection of broader than 20.2mic types went to 100ac dearer levels. Once again it was the FNF (less than 1 per cent VM) types were chased the hardest. Heavier VM types sold well but gains were not as much as the above quoted movements. Skirtings and cardings were dearer to similar amounts as the fleece, whilst crossbred and comeback types rushed to levels of 50 to 70ac higher for the week.
Towards the close, the steam seemed to go out of the market and price gains were restricted to more manageable numbers. Sydney and Fremantle continued by 10 or 20ac but the larger offerings available ex Melbourne saw some wools ease back, as many industry participants showed concern of the quickly escalating levels. Of most importance though was that the better wools across all wool types were still being well sought after and it was only the average to inferior descriptions and lots showing hard to place test measurements that displayed this nervousness.
Disclaimer: Echemi reserves the right of final explanation and revision for all the information.