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Australian wool markets move back to positive this week
Apr '17
Courtesy: Wikipedia.org
Courtesy: Wikipedia.org
Australian wool markets moved clearly back to the positive in sale week 40 of July-June 2016-17 as auction prices were sensationally dearer. The AWEX Eastern Market Indicator (EMI) climbed daily and concluded the selling week at 1512ac/clean kg, a gain of 53ac/clean kg for the week. Merino sector recorded gains of well over 100ac/ clean kg.

Buyers hit the market strongly to cover off new and existing open positions leading to gains in the merino sector. Crossbreds were well sought with just the carding segment losing out in an incredibly strong week, building on top of the already historically high price levels, said the Australian Wool Innovation in its ‘Wool Market’ weekly report.

However, with a weaker AUD v USD forex rate the move upwards was less intensive when the EMI is measured in USD but a still imposing 3 per cent rise to 1134usc/clean kg was achieved in a stellar selling week.

While, the merino sector experienced heavy prices rises this week, the superfine and ultra fine sectors (wools finer than 18.6micron) gained a 45 to 60ac/clean kg but it was the 19 to 21.8 micron area that was extreme with a 100 to 130ac/clean kg advance in price levels recorded, with the highest weekly price at the close of selling.

Early in the week it was local traders dominating, but the largest rises occurred when the major Chinese indent buyer joined in through the final day, but those locals had an average up their sleeve and were mainly able to out buy them. As this happened though most other buyers chose to completely avoid getting caught up in that type of aggression and left the action to just those 3 or 4 buyers.

The continuation of the wool market's stunning reversal of fortune after 2 weeks of rapidly diminishing levels was largely expected, but 3 or 4 buyers took the market to sensational daily gains this week. Recent history shows that moves of this scale are not always sustainable, particularly in a growing supply year, however wool growers were happy nonetheless, reflected in the reduced passed in rates of just over 5 per cent.

The erratic movements of the past 2 weeks indicate two major influences as to the way the wool market trading has developed since the supremacy of Chinese buying, the report said.

Analysing further, the report says that it is clear that the local buyers and exporters have their fingers on the pulse of the sentiment of their major clients. “The close relationships between overseas buyers and local operators transfers that demand (or lack of) immediately into the sale rooms.”

The second point is that the hand to mouth method of purchase from the Chinese is way and above the preferred means of purchase. This is evident from both sides, with local exporters exposing themselves to less risk by selling promptly and the manufacturers avoiding the pitfalls of buying too far into the future. This is risk adverse behaviour towards both the fluctuations in the price of wool and any exposure to shifting foreign exchange rates.

Australian auction sales will be in recess next week, and the next sale of 50,000 bales is scheduled to be on offer in the week commencing 24th April. (RKS)

Fibre2Fashion News Desk – India

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