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Australian wool prices drop last week

27
Feb '12
Australian Wool Industries Secretariat Inc (AWIS) releases wool sale report for the week ending 24 February 2012. The Australian Wool Exchange (AWEX) Regional Indicators finished 3.3% lower, on average, at sales in Sydney, Melbourne and Fremantle this week. The US exchange rate fell by 0.3%.

This week was the second week of a four week trial in which all centres commence selling on Tuesday. Melbourne sold over three days, while Sydney and Fremantle sold on Tuesday and Wednesday.

As expected, the market got away to a slow start, following the easing seen on Thursday of last week. Individual Merino Micron MPGs fell by amounts from 18¢ to 49¢, with most falls between 30¢ and 40¢. Changes in crossbred MPGs were smaller, ranging from +6¢ to -20¢. The larger fall in the Western Indicator was mostly due to a reported 86¢ fall in the 18.5 MPGs and the absence of crossbred wools which cushioned the falls in the East.

The further falls on Wednesday and Thursday were greatest at the fine end.

Sellers reacted to the downturn in the market with an increase in the pass-in rate, particularly in the West where it was 38.6% on Wednesday.

Looking at the market over the last month, All Regional Indicators are above the levels of three weeks ago in both Australian and US currency. The Eastern Market Indicator (EMI), at 1207¢, is 14¢ above the level of three weeks ago in A$ and 7¢ above the equivalent level in US currency.

49,584 bales were on offer, compared with 47,417 bales last week. 20.9% were passed in, comprised of 13.4% in Sydney, 20.3% in Melbourne and 29.8% in Fremantle. Pass-in rates for Merino fleece and skirtings were 25.9% and 20.2%, respectively. 39,223 bales were cleared to the trade.

The New Zealand Merino Company also offered 2,843 bales in Melbourne on Tuesday, of which 42.0% were passed in. The year-to-date Australian offering is 40,560 bales less (-3.1%) than at the end of the same week last year (see table on the next page). Current estimates for the next three sales indicate that the year-to-year difference may reduce slightly over that period. Next week's sale looks to include some wool flushed out by the price rises of two weeks ago.

The US exchange rate (Reserve Bank) changed little on a week-to-week basis, but was quite volatile during the week. Rises last Friday and on Monday were attributed to confidence that the Greek “bailout” would be agreed to and a monetary easing in China. The increase could not be sustained over the next three days, falling back to just below last Thursday's close.

The fine wools recent better run came to and end this week when their average AWEX Micron Price Guide (AWEX MPGs) fell by a greater amount than those for the medium and broad Merino wools.

Skirtings had a mixed start to the week with rises reported in the North and an easing in the South and the West. The falls continued in the South and the West on Wednesday, but settled on Thursday when only Melbourne sold.


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