AWEX wool indicator up 0.3% from last week

07 May '12

4 min read

Australian Wool Industries Secretariat Inc (AWIS) releases wool sale report for the week ending May 04. The Australian Wool Exchange (AWEX) Regional Indicators finished 0.3% higher, on average, at sales in Sydney, Melbourne and Fremantle this week when the US exchange rate fell by 0.7%.

This week's market followed last week's steadying in the market, with small rises in the Eastern Market Indicator (EMI) on each selling day. But, there was a small fall of 3¢ in The Eastern Market Indicator (EMI) in US currency for the week. 20 to 22 micron wool fared best among the Merino micron ranges on Wednesday; and 23 micron wools appeared to do best on Thursday. There were also some good spots at the fine end on Thursday.

Crossbred types had another good week. It was a good overall result, considering trade reports during the week indicating that demand is subdued and that the offering contained a large proportion of poorer quality wools. The free, or nearly free, wools were in keen demand and attracted good prices, as was the case last week.

Western sellers reacted to the easing in the Fremantle market on Thursday with a lift in their pass-in rate from 11.4% on Wednesday to 25.3% on Thursday.

Looking at the AWEX Market Indicators this time last year – The Eastern Market Indicator (EMI) at 1170¢ is 136¢ less than in the same week last year; but the season average of 1221¢ is 133¢ higher than the season average at the end of Week 44 last year. The WMI is 82¢ less than in the same week last year; and the season average of 1064¢ is 156¢ greater than at the end of Week 44 last year.

In other countries, there were no sales in South Africa; and coarse crossbred prices again retreated in New Zealand by up to almost 5%.

Among other fibres, July futures for cotton were down by 3.6% from last week to close at 87.99¢ on Friday.

In a slightly larger sale, 42,540 bales were on offer, compared with 38,103 bales last week. 11.9% were passed in, comprised of 11.5% in Sydney, 9.3% in Melbourne and 17.7% in Fremantle. Pass-in rates for Merino fleece and skirtings were 9.1% and 22.7%, respectively. 37,486 bales were cleared to the trade.

The year-to-date offering is 51,466 bales (3.0%) less than at the end of the same week last year. Current estimates for the next three weeks are all less than 40,000 bales and are slightly up on last year, indicating that the difference in the year-on-year offerings will be of a similar size to the current difference over the next three sales.

The major impact on the United States exchange rate this week was decision by the Reserve Bank of Australia to lower the official cash rate by 0.5% to 3.75% on Tuesday. Most (but not all), financial analysts and institutions had tipped a 0.25% reduction and had built this into their expectations of changes in the US exchange rate. The general under-estimation of the expected change in the Australian official cash rate led to the fall in the US exchange rate on Tuesday.

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