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Wool prices drop
09
May '11
The AWEX Regional Indicators finished 1.2% lower, on average, at sales in Sydney, Melbourne and Fremantle this week when the US exchange rate rose by 1.5%. The season average for the AWEX EMI (1082¢) continues to rise and is now 219¢ (25.3%) above the average to the same time last year.

47,680 bales were on offer, compared with 48,837 bales at the last sale in the week ending 22 April. Pass-in rates remained high at 17.2%, comprised of 17.6% in Sydney, 14.2% in Melbourne and 23.3% in Fremantle. Pass-in rates for Merino fleece and skirtings were 16.6% and 22.8%, respectively. 39,501 bales were cleared to the trade.

The closing US exchange rate (RBA) has risen sharply from 105.83¢ on the last selling day on 20 April. It closed at 107.69¢ the following day, peaked at 109.25¢ the next week and closed at 109.39¢ on Monday, before closing at 107.41¢ on Thursday night. The falls since Tuesday have been attributed to a transfer of funds to “safer” havens such as the Swiss France, caution about the rate of the rise in the exchange rate and to the release of lower than expected retail sales data on Thursday.

It was unlikely that this week's market would escape the 3.4% rise in the US exchange rate to Monday night. This was borne out in the fall of 29¢ in the AWEX Southern Market Indicator on Tuesday. The market steadied on Wednesday and moved up on Thursday, as the US exchange rate eased, resulting in the AWEX EMI finishing the week down by 19¢ in Australian currency and up by 1¢ in US currency. The volatility in the market was most apparent at the fine end where individual MPGs were down by 40¢, or more, by Wednesday, but recovered a large part of their losses on Thursday. Wools carrying higher VM levels were most affected when the market eased.

The EMI in US currency (1403¢) remains high and is up by 81.4% since the start of the season. The recent rises in the US exchange rate mean that the 77¢ easing in the EMI in Australian currency over the last four sales converts to only 26¢ in US.

It was a mixed week for skirtings with good quality ones attracting very good prices. But, the buyer resistance to the poorer quality lots referred to in recent weeks continued in this sale. The reluctance of sellers to accept the lower prices for these wools continued when the pass-in rate for skirtings was 23.3%, and well above that for fleece types. Medium and broad crossbred types came under pressure on Tuesday when their MPGs eased by 5 to 6% and their pass-in rate moved up. There was a small recovery at the end of the week, but not enough to cancel out the earlier losses. Oddments were also down for the week, with small gains on Thursday that were unable to make up for losses on Tuesday.

Buyers for China were dominant with other buying support from India, Korea and Europe.

Sales will be held in Sydney, Melbourne and Fremantle next week, when 40,183 bales are currently rostered for sale. Present estimates for the following two sales (Weeks 46 and 47) are 39,190 and 34,800 bales, respectively; a decrease of 10.7% over the three sale period when compared with last year.

In South African sales, the Cape Wools Indicator was down by 1.9% since last sale against a 0.4% depreciation of the Rand against the US Dollar and a 2.7% depreciation against the Euro. 10,812 bales were on offer.

The Cape Wools Indicator has appreciated by 44.9% in Rand and by 58.9% in US currency since the start of the South African season.

Click here to read more:

Australian Wool Industries Secretariat Inc

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