Merino wool prices drop as wool market faces tough times ahead

13 Sep '05

3 min read

The Australian Wool Market finished this week with prices 2.2 percent lower, on average, at the sales in Sydney, Melbourne and Fremantle.

The AWEX EMI decreased by 14¢ (-2.0 percent), ending the week at 678¢/kg clean. This reflected decreases of 15¢ (-2.1 percent) in the North and 13¢ (-1.9 percent) in the South, with their corresponding Regional Indicators finishing the week at 683¢ and 673¢ clean respectively. The sale in Fremantle saw the Western Indicator fall by 18¢ (-2.7 percent), finishing the week at 652¢/kg clean.

52,740 bales were on offer (compared with 55,756 last week), of which 19.0 percent were passed in, comprised of 16.0 percent in Sydney, 19.0 percent in Melbourne and 22.7 percent in Fremantle. Pass-in rates for Merino fleece and skirtings were 22.2 percent and 14.8 percent respectively. 2,488 bales (4.5 percent) were withdrawn prior to sale and re-offered wools made up 10.9 percent of this week's offering.

The US exchange rate increased by 1.40¢ on Monday when compared with the previous Thursday. This was followed by a decrease of 0.23¢ on Tuesday, an increase of 0.07¢ on Wednesday and an increase of 0.20¢ on Thursday to close at 76.96¢, up 1.44¢ (1.9 percent) for the week. The exchange rate against the Euro increased by 0.71 Euro cents (1.2 percent) to close at 61.93 Euro cents. When looked at in other currencies, the AWEX EMI decreased by 1¢ in US$ terms and by 4¢ in Euro terms when compared with last week's sale.

This week's sale was one of two contrasting days. The EMI fell by 16¢ (-2.3 percent) on Wednesday, partly in response to a 1.6 percent appreciation of the US exchange rate, but also because of reduced Chinese support. Seller's reacted strongly, with the national pass-in rate rising to 22.2 percent. Yesterday saw stronger Chinese competition and a 2¢ (+0.3 percent) rise in the EMI against a 0.3 percent further increase in the exchange rate. The Western Indicator fell by 19¢ on Wednesday and rose by 1¢ yesterday.

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