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Australian wool market up

13
Feb '12
Australian Wool Industries Secretariat reports Australian Wool Exchange (AWEX) Regional Indicators finished 4.4% higher, on average, at sales in Sydney, Melbourne and Fremantle this week when the US exchange rate rose by a further 0.8%.

The market got away to a firm start in the South on Tuesday when the Southern Market Indicator moved up by 6¢, based on strong rises in the 16.5 and finer and in the 18.5 microns and broader Merino wools.

This was followed by very strong demand and rises across all Merino types and micron ranges on Wednesday and Thursday, that saw the Eastern Market Indicator (EMI)move up by 4.2% for the week to reach its highest level since mid-September. Average AWEX MPGs for Merino wools are up by 4.0 to 5.8%; and crossbreds by lesser amounts.

The rise in the EMI in A$ was achieved in spite a further, but more moderate, increase in the US exchange rate. The EMI is US was up by a further 64¢, taking the lift in the EMI in US terms to 165¢ since the last sale before Christmas. The EMI, in US terms closed at 1343¢, its highest level since early September, but below the peak of 1515¢ in late June.

There were more modest increases in South Africa, where the Cape Wools Indicator was up by 0.5%against a stronger exchange rate.

42,907 bales were on offer, compared with 37,382 bales last week. 6.4% were passed in, comprised of 5.0% in Sydney, 6.6% in Melbourne and 8.0% in Fremantle. Pass-in rates for Merino fleece and skirtings were 4.4% and 6.7%, respectively. 40,163 bales were cleared to the trade.

The year-to-date offering is 41,998 bales less (-3.5%) than at the end of the same week last year (see table on the next page). The current estimates for the next three sales suggest that the difference will slip back a little more in the short term. But, it would not be a surprise if this week's market flushed out some wool on hold and some previously passed-in wool.

The US exchange rate (Reserve Bank) continued its upward movement this week, again breaking the 108¢ barrier. This was probably partially influenced by the Reserve Bank's decision to leave the official cash rate unchanged at 4.25%. This decision surprised many financial analysts.

Any rise in the US exchange rate invariably brings out various experts' predictions on where it will peak. The Australian newspaper quoted a tip of 120¢ during the week.

There were very solid gains across all the Merino average AWEX Micron Price Guide (MPGs). As always, it was good to see the gains including all the Superfine ranges. The average 16.5 MPG has risen over each of the last three weeks. At 2004¢, it is now up by 193¢ since the closing sale before Christmas.

The 20 to 23 micron wools have either nearly regained the losses since earlier in the season, while the 23 and 24 micron wools are now ahead the start of the season. All of the 20 to 24 micron wools are ahead of the same sale last year.

Skirting types did well, but appeared to lag slightly behind the fleece types. Crossbreds did well, but generally were a little behind the Merino wools. Oddments were a bit mixed, but generally did less well than the fleece types. The average AWEX Merino Cardings was up by 3¢.


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