Optimism in Australian wool market as prices rise

There were rises in all wool types and across nearly all micron ranges.  The strength of the market was reflected in the very low pass-in rates in all centres.  There appeared to be more optimism than has been the case in recent weeks.

Newcastle got away to a good start on Tuesday when it was the only centre selling. There were large rises in the AWEX Micron Price Guide (MPGs) up to 17.5 microns and good premiums for the top wools that continued throughout the week.  Trade reports say the market finished on a very strong note on each of the three selling days.  While the Italian presence was very strong, there was also some strong competition from China.

The Southern and Western Markets also opened strongly on Wednesday, with the greatest gains being up to 18.5 microns.   The fine wools, and up to 20 microns, were the strongest performers in Melbourne on Thursday.

Overall, a good week, particularly for the fine wool growers. The Eastern Market Indicator (EMI) at 1002¢ is just back over the 1000¢ mark in US currency. There have been reports of increased demand from spinners in Europe, but that they are asking for very short delivery times.

In other countries, the Cape Wools Indicator in South Africa was up by 8.3% in Rand and by 4.3% in US currency since last week.  The Wool Services International Indicator for fine crossbred fleece was quoted as up to 5% dearer; and coarse crossbred fleece as firm to 2.5% dearer in New Zealand.

Among other fibres, cotton Futures up to July next year all fell slightly during the week.  December Futures were 71.36¢ on Friday, down by 0.2% since the previous week

37,118 bales were on offer, compared with 43,271 bales last week.  3.6% were passed in, comprised of 1.7% in Newcastle, 3.9% in Melbourne and 6.1% in Fremantle.  Pass-in rates for Merino fleece and skirtings were 3.5% and 1.6%, respectively.

35,780 bales were cleared to the trade. The year-to-date offering is 68,333 bales less (-12.7%) than at the end of the same week last year. 

This difference is expected to become less over the next three sales, each of which is expected to be larger than the corresponding sale last year.  If the expected offerings are achieved, the year-on-year difference will be between minus 7% and minus 8% in at the end of the period.

Next week’s expected offering of 51,861 bales sale is the largest for the season to date. The US exchange rate fell sharply early in the week before lifting on Tuesday and again on Thursday.  Financial analysts attributed the fall on Monday more to the strength of the US$, arising from strong US jobs data, than to a weakness in the A$.