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Wool prices remain strong
04
Oct '10
The Australian wool market finished 0.9% higher, on average, at sales in Newcastle (second sale of the season), Melbourne and Fremantle this week when the US exchange rate rose by another 1%.

40,861 bales were on offer, compared with 40,660 bales last week. 5.7% were passed in, comprised of 4.9% in Newcastle, 4.5% in Melbourne and 11.0% in Fremantle. Pass-in rates for Merino fleece and skirtings were 6.6% and 3.9%, respectively. This was the lowest overall pass-in rate for the season.

1,358 bales (3.2%) from the expected offering of 42,219 bales were withdrawn prior to sale and re-offered bales made up 8.2% of the final offering. 38,518 bales were cleared to the trade.

The US exchange rate has continued its sharp rise, breaking through 97¢ on Wednesday night before coming back to around 96.7¢ on Thursday. The closing US exchange rate rose by 7.75¢ in September. It appears to still be driven by lack of investor confidence in the United States, growth in China, together with strikes in Europe and an expectation that the Reserve Bank may lift the official cash rate on Tuesday.

It was a very strong market with very keen competition in the sale rooms and the EMI up in all currencies, despite the increase in the US exchange rate. The EMI rose by 71¢ (+9.2%) in US currency in September. The Newcastle market was led by some of the traditional buyers for Italy, with some keen competition from China.

The medium and broader Merino market was also very strong and recovered some of the lead that the fine wools have had over them this season. Globally, markets were also strong in South Africa and New Zealand.

Demand for Skirting types continued on from last week, particularly for the better types. Fine crossbreds did very well, while the average AWEX MPGs were down slightly for medium and broader types. Oddments had another good week after mixed season to date. The lift of 12¢ (2.1%) in the average AWEX Merino Cardings Price Guide was the largest week-on-week increase this season.

Buyers for China were again dominant followed by buyers for Europe (particularly in Newcastle) and India.

Sales will be held in Sydney, Melbourne and Fremantle next week, when 46,367 bales are currently rostered for sale. Present estimates for the following two sales (Weeks 15 and 16) are 42,820 and 43,730 bales, respectively; a decrease of 2.7% over the three sale period when compared with last year. The New Zealand Merino Company is rostered to offer 3,350 bales in Melbourne next week and 2,500 bales in Week 16.

In South African sales, the Cape Wools Indicator was up by 3.6% since last week in a very strong market. The Rand appreciated by 1.1% against the US Dollar and depreciated by 0.8% against the Euro. 6,759 bales were on offer.

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Australian Wool Industries Secretariat

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