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Low wool arrivals push up Aussie auction prices
Jan '14
A reduced selling week of just 2 days at Australian wool auction centres saw the market react positively against the back drop of the greatly reduced volume put up for sale. By week’s end just over 32,000 bales had been traded through the system, which must be one of the smallest trading weeks for quite some time.

Year on year figures are showing a reduction in the clip of around 2.7% having been offered to the trade, which is in the ball park of the forecast figure reported by the AWPFC prior to the commencement of the selling season. An Aussie dollar trading in the AUD:USD 0.87 range certainly added some impetus of the generally stronger local prices, but an expected further weakening of our exchange rate due to poor Chinese manufacturing figures somewhat retarded forward operators obtaining sales into the near and distant future.

The early part of the auction sales saw price levels rise across most of the selection, with stiff competition leading to the Eastern Market Indicator (EMI) putting on A6 cents clean/kg by the end of the first day. Major gains were being made at the finer end of the Merino selection, with Superfine types (18.5 micron and finer) again making the most significant upward movements.

In this Superfine area, the price gaps between best style and strength lots compared to average types continues to widen, and now sit at around A120 cents clean/kg, the largest gap seen for quite some time. The indent orders emanating out of China were again in evidence and had a strong influence this week. The local forward sellers were their primary source of competition, although some strong activity on the better fleece and skirting types from Italy and the Czech Republic was witnessed throughout selling.

The final day saw some mixed results whereby the tone of the Merino fleece sector had subdued some what and prices eased. Particularly affected was the lower end of the fleece types on offer, which fell dramatically in some cases, with most of the losses occurring on sale lots exhibiting the higher pobM (position of mid-break) readings and low strength.

On the plus side though was that all decent Merino fleece and all other wool sectors remained strong to slightly dearer through to the close. As a result the EMI lost 2acents clean/kg on the final day, but an overall market gain of 4acents clean/kg was the final result of this selling week.

The sharp increase in volumes for sale over the next few weeks will no doubt place the market under some pressure to maintain the decent levels currently being extracted from the buyers. The next four weeks of auctions in Australia are scheduled to offer almost 200,000 bales and a high percentage of that selection will be Superfine Merino wool.

The good price run these wools have experienced since the Christmas recess will be hard pressed to maintain and the demand in this area will surely be tested. With very little broader Merino wools available, perhaps the trend may hold. Next week is the Chinese New Year holidays, so the indents may be more subdued from that nation, but a good portion of the offering is expected to suit the European and sub continent orders.

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