Australian wool prices continue to climb

The changes of over 50¢ in all Regional Indicators were the highest for the season, taking each Indicator to above its value in Week 01 for the first time this season.

The market opened in Melbourne on a very solid basis following last week’s strong close (when the EMI had lifted by 15¢ on Thursday). The Southern Indicator rose by 18¢ on Tuesday, with gains across all micron ranges and wool types. The greatest gains were recorded in the 18.5 to 22 micron AWEX Micron Price Guides (MPGs). The gains ranged from 2.4% at 18.0 microns to 3.2% at 22 microns.  Competition was strong and widespread.

Wednesday’s market saw a further strengthening of the market with even larger gains in all Indicators and MPGs. The greatest gains were in the 19.0 to 22 MPGs, which went up by a further 3.1 to 3.5% in the South. Competition was again very strong and widespread.

Thursday’s market was more subdued and finished slightly down in the West.  It was still strong enough to result in most Eastern Indicators and MPGs being up, or relatively unchanged, apart from the 16.5 and 17.0 MPGs in Sydney. The 19.0 to 23 MPGs rose by around a further 1%, on average in the South.  Demand for 19.0 to 23 micron wool from China has seen these average MPGs move by amounts ranging from 6.3% to 7.3% since last week.

The EMI is now 82¢ (-7.0%) less than in the same week last year and is 16¢ (1.5%) higher than at the start of the season.  The WMI is 58¢ (-5%) less than in the same week last year and is 27¢ (2.5%) higher than at the start of the season. In other countries, the Cape Wools Indicator was up by 7.0 in Rand and by 7.9% in US currency since last week.  South Africa sells on Wednesday and missed out on the gains in Australia last Thursday. Among other fibres, cotton Futures were relatively unchanged during the week.  March Futures closed at 73.791 US¢ on Friday, down by 0.2% since the previous week.

45,688 bales were on offer, compared with 49,150 bales last week.  4.2% were passed in, comprised of 2.6% in Sydney, 3.9% in Melbourne and 7.3% in Fremantle.  Pass-in rates for Merino fleece and skirtings were 4.1% and 3.0%, respectively.43,747 bales were cleared to the trade.

The year-to-date offering is 30,374 bales less (-3.4%) than at the end of the same week last year (see table on the next page).  The expected offering of 53,600 bales will take the difference to about -2.4% next week.AWTA Key Test data for November shows that 4.0% more wool was tested in the July to November period this year.

As was generally expected, the Reserve Bank lowered the official cash rate by 0.25% to 3.0% this week.  It has come down by 1.75% since late last year.  Expected changes in the official Cash Rate are usually factored into the exchange rates, such that there is little change when the announcement is made. However, on this occasion the US exchange rate rose.  Financial analysts attributed this to continued overseas sovereign investment in Australian bonds and to further central bank intervention in other countries.