Eurozone bail out plan cheering Aussie wool market
Australian Wool Industries Secretariat Inc (AWIS) releases wool sale report for the week ending 13 January 2012. The market opened strongly after the break when the Australian Wool Exchange (AWEX) Regional Indicators finished 2.1% higher, on average, at sales in Sydney, Melbourne and Fremantle this week and the US exchange rate rose by 4.1% since the last sale in Week 24.
The Eastern Market Indicator (EMI) at 1216¢ is 64¢ higher than in the same week last year; and the season average of 1232¢ is 291¢ higher than the season average at the end of Week 28 last year. These differences are likely to be narrowed as the season progresses, as the January to June period last year was one of large price rises.
The market opened strongly in the South on Tuesday following the positive finish to the last sale prior to the break and reports of reasonable sales during the break. The small quantity of Merino fleece was in very strong demand on Tuesday. This momentum was maintained on Wednesday, before easing slightly on Thursday. The price falls on Thursday were greatest in the West, but not enough to cancel out Wednesday's gains.
It was a strong market in South Africa also, where the local Indicator was up by 7.1% and their exchange rate in US currency was down by 1.3% since their previous sale in Week 23.
49,498 bales were on offer, compared with 45,108 bales at the last sale. 7.9% were passed in, comprised of 6.0% in Sydney, 6.4% in Melbourne and 13.1% in Fremantle. Pass-in rates for Merino fleece and skirtings were 7.7% and 5.4%, respectively.
45,610 bales were cleared to the trade.
This week's offering was 0.6% less than Week 24 last year, while the year-to-date offering is 23,933 bales less (-2.4%) than at the end of the same week last year (see table on the next page).
The US exchange rate appreciated steadily during the break, avoiding the extreme fluctuations that occurred in the weeks leading up to the break. The latter was mostly due to global financial markets being very sensitive to any economic data after the release of the most recent Eurozone “bail out” plan; and the mixed reactions to it. The Euro exchange rate appreciated sharply during the break. It is now above 80 Euro cents for the first time.
It was a good week for Merino wools with all average AWEX Micron Price Guide (MPGs) moving up for the week. It was good to see the strong gains at the fine end again. The medium and broader types continue to be the “best” price performers since the start of the season and when compared with the same time last year.
The sale-on-sale rises were achieved in spite of the 4% appreciation in the US exchange rate.
Merino skirtings started strongly on Tuesday, in line with the rises in fleece types and continued on an upward path on Wednesday. Thursday saw most types holding firm, or moving up slightly.
Crossbreds MPGs were all down on Tuesday, when they were available in relatively large supply. Prices steadied over the next two days, but it still left most average MPGs down for the week.