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Australian wool auction prices dip this week

Aug '18
Courtesy: Pexels
Courtesy: Pexels
The extensive gains of over 6 per cent in AUD terms seen in the previous week could not be sustained at the Australian wool auction this week, and the market was cheaper from the first lot put up for auction. The Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) shifted downward by 48ac clean/kg or 2.27 per cent to close at 2068ac clean/kg.

The EMI when expressed in USD was somewhat lessened by the impact of the movement of the forex (foreign exchange) rates used in wool buying and backed off to around half of the marginal easing that the AUD prices took. The USD EMI depreciated by 18usc or 1.11 per cent to 1521usc clean/kg. However, the major adjustment this week was seen on the euro levels which moved almost 3 per cent lower week on week.

European buying continued to take the cream of the offering during the sale week 08 of the current wool season. Even though the market looked all lower, those better specification types were not at all significantly lower, perhaps 10 to 20ac is all that could have been taken off quotes for these better types.

“The less favourable forex rate of the AUD versus the USD (upwards of 1.5 per cent as selling was underway) signalled the backward trend, but also some price sensitivity had been reached for the time being out of China as that market basically stopped any new forward contract orders for a few days. As the price backed off lower though, some fresh business was being written, as the factors that had elevated the wool price to where it was, hasn't changed,” the Australian Wool Innovations Ltd (AWI) said in its ‘Wool Market’ report for the sale week ending August 23, 2018.

“There is still a dangerously low to almost empty pipeline of raw wool in front of first stage processors. As the current bull run in market levels has been on-going for significantly longer than most would have predicted, many manufacturers have stayed steadfast to the hand-to-mouth purchasing operation method that has been in play for many years now, which sees those users buying just in time to fulfil orders,” the AWI report said.

Analysing global wool production, the report says it is being severely hampered at present by climate and high sheep and lamb meat prices. “Availability of well-bred sheep to increase the wool sheep breeding flock is additionally hard to come by. When we see the drought’s stranglehold released on landowners, the price of those replacement animals may well be too provocative to consider, given the amount of expenditure currently being exhausted on keeping each farm’s core breeding stock in good health.”

All three wool auction centres in Australia will be back in action next week. However, the volume of around 35,000 bales that will be up for sale is far short of what is normally expected at this time of year in Australia. (RKS)

Fibre2Fashion News Desk – India

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