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Aussie wool rallies spectacularly this week
Aug '13
Australian wool auction markets rallied spectacularly this week, with substantive price gains being recorded across the entire selection. Amidst the prevailing gloomy conditions of the past few months, very few of the buying fraternity predicted such a sharp escalation in levels and the swiftness in the turnaround from the very bearish atmosphere to the exceptionally bullish series which occurred this past week.

All sectors were extremely well sought and the intensity of the sale room operators continued solidly through to the close of selling in all markets. Of most significance was the return to favor of the Merino fleece sector. The Superfine fleece types in particular attracted the keenest competition seen for some time on that segment.

Chinese interests were dominant throughout all areas. Exporters had fielded significantly more requests for offers and had written plentiful new business prior to the commencement of selling. These forward sellers led the charge and were keen to quickly cover their outstanding and new commitments from the outset.

This led to an initial price movement of 15 to 20acents, but strong indent orders from China entered the market following the directional change and immediately doubled the rise levels as they exerted their strength under instruction from their offshore principals. Continued forward buying out of China continued strongly overnight on Wednesday and local auction markets reacted positively once again on the final day.

Growers of Superfine Merino fleece descriptions 18.5 micron and finer can be well pleased with the series, with a general increase of approximately 6 to 7% in value of their production in the single selling week. With the series featuring a good volume of superior types produced from the New England and Tasmanian areas, it must be somewhat of a relief to finally see a nice premium of 100acents being paid for the spinners and best top making types above their lesser counterparts.

Fine and medium Merino fleece types 19 to 23 micron were also in strong demand, and prices ascended by a substantial 60 to 80acents clean. A tougher growing season across Australia has made the majority of clips finer in micron and the  20.0 micron and coarser selection is predicted to be in a shorter supply situation than we had in the 2012/13 season, so exporters will be more inclined to spot cover these types rather than to leave an exposed open position.

The Merino skirtings and cardings of all microns made some good ground although not to the same extreme as the fleece. Superfine skirtings posted the largest gains of a general 40acents with all others making 20 to 25acents. The cardings are still on the rise above record levels and another 10acents was placed onto the cost price for buyers of these types.

The comeback and crossbred market of all types and descriptions 24 to 32 micron came under demand pressures as well, although not to the same extent as the Merino sectors. A small selection of the finest edge made 40acents gains whilst the majority of the offering which fitted into the coarser area added a decent 20acents to their market values.

With the EMI in AUD terms now sitting at a level of 14% better than the same period last year, and the AUD v USD rates being 14% lower, we now witness the strange scenario where the EMI expressed in USD is basically unchanged year on year yet locally our growers are receiving 130acents more.

Australian Wool Innovation Ltd

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