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Australian wool market drops

06
Feb '12
Australian Wool Industries Secretariat Inc reports that AWEX Regional Indicators finished 0.3% lower, on average, at sales in Sydney, Melbourne and Fremantle this week when the US exchange rate rose by a further 1.9%.

The market got away to a steady start in the East on Wednesday, with the EMI up by 1¢; based on good gains at 17 microns and finer and small movements in both directions in most other micron ranges. The start was not as good in the West, with falls in most wools other than 22 microns. Thursday's market saw further gains at 17 microns and finer, but an easing among most other micron ranges.

Nevertheless, it was a very solid week in global terms, given the significant increase in the US exchange rate since the last sale. The US exchange rate is now up by 8.3% since the close of the last sale prior to Christmas, which takes the change in the EMI in US currency over the same period to 101¢.

The Cape Wools Indicator in South Africa was up by 0.5% in a smaller sale.

37,382 bales were on offer, compared with 44,751 bales last week. 9.9% were passed in, comprised of 8.4% in Sydney, 9.3% in Melbourne and 13.0% in Fremantle. Pass-in rates for Merino fleece and skirtings were 10.3% and 7.5%, respectively.

33,681 bales were cleared to the trade.

The year-to-date offering is 40,582 bales less (-3.5%) than at the end of the same week last year (see tables on the next page). Current expectations of offerings over the next three weeks suggest this figure will stay much the same over the period.

The US exchange rate (Reserve Bank) continued its upward movement this week, finishing with a sharp rise of over one cent on Thursday. Thursday's rise was attributed to the release of better than expected Australian export figures for December.

The ongoing rise matches the expectations of financial analysts last week when the United States Federal Reserve announced that it expects to keep interest rates in the 0.0% to 0.25% range until 2014.

There were solid gains at the finest end of the micron scale again this week for the second week in a row. Otherwise, most other average AWEX MPGs were down by a small amount. The appreciation of the US exchange rate, would put the all the changes in the MPGs into positive territory for the week.

All Indicators, apart from the 24 micron MPG, continue to be down since the start of the season. But, 20 to 24 micron wools have all made good gains since the same time last year. Fine wool MPGs are behind last year. But, they were making the greatest gains then.

Better skirtings types started the week on a firm, or upward note, while the lesser types eased. Strong competition in the South on Thursday led to increases in that market. The Northern and Western market remained firm on Thursday.

Among the non-Merino types, the presence of some well prepared comeback wools led to an increase in the 26 micron MPGon Thursday which was reversed on Thursday. Other MPGs were relatively unchanged.


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