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Wool market follows South Africa in growing by 6.5%

14
Nov '08
The Australian wool market finished 6.5% higher, on average, at sales in Sydney, Melbourne and Fremantle this week. It was the biggest weekly lift in the market since October 2006, when the market was moving upwards at a rapid pace in response to concerns about supply due to deteriorating seasonal conditions.

The AWEX EMI rose by 43¢ (+5.9%), ending the week at 766¢/kg. This reflected rises of 45¢ (+6.0%) in the North and 41¢ (+5.8%) in the South, with their corresponding Regional Indicators finishing the week at 794¢ and 743¢ clean, respectively. The Western Indicator rose by 53¢ (+7.6%), finishing the week at 746¢. The greater lift in the Western Indicator was due to the relative absence of fine wools in the Fremantle sale. The fine wool rises were less than those in the medium and broader Merino types.

In a three day sale in Sydney and a two day sale in Melbourne, the AWEX EMI rose by 4¢ on Tuesday, by 11¢ on Wednesday and by 28¢ on Thursday. The Western Indicator rose by 23¢ on Wednesday and by 30¢ on Thursday in a two day sale in Fremantle.

43,661 bales were on offer, compared with 40,160 bales last week, of which 10.0% were passed in, comprised of 9.4% in Sydney, 8.3% in Melbourne and 15.3% in Fremantle. Pass-in rates for Merino fleece and skirtings were 11.1% and 7.0%, respectively. 6,567 bales (13.1%) were withdrawn prior to sale and re-offered bales made up 13.1% of this week's offering.

The US exchange rate (source RBA) was 1.39¢ higher on Monday when compared with Thursday of last week. It was then down by 1.39¢ on Tuesday, by 1.33¢ on Wednesday and by 2.04¢ on Thursday to close at 63.93¢, down 3.37¢ ( 5.0%) since the last sale. The exchange rate against the Euro fell by 0.97 Euro cents (-1.9%) to close at 51.32 Euro cents on Thursday night. When looked at in other currencies, the AWEX EMI moved up by 3¢ (+0.6%) in US terms and by 15¢ (+4.0%) in Euro terms when compared with the previous sale.

There were a number of factors which may have influenced the market this week, particularly the fall in the US exchange rate. We have also seen the Bank of England's 1.5% reduction in interest rates late last week and the announcement of $855 billion Chinese financial stimulus package this week. The latter may have stimulated confidence, but is difficult to know. Also, the market had finished on a more positive note last Thursday.

Rises in the AWEX Micron Price Guides (MPGs) for Merino wools varied from +1.8% (17 microns) to +8.4% (19.5 microns), with the 20 to 24 micron increases being around 7 to 8%. Average AWEX Micron Price Guides (MPGs) were up by 23¢ for 17.0 microns, by 51¢ for 17.5 microns, by 35¢ for 18.0 microns, by 42¢ for 18.5 microns, by 69¢ for 19.0 microns and by 76¢ for 19.5 microns. The 20.0 micron wool average MPG was up by 61¢ clean, 21.0 microns by 61¢, 22.0 microns by 56¢, 23.0 microns by 51¢, and 24.0 microns by 39¢.

Prices for Merino skirtings lifted sharply during the week to finish on a strong note. Crossbred types also lifted during the week with rises in their average MPGs by around 15¢ at the fine end, up by about 30¢ for medium types and by around 25¢ for coarse crossbreds. Oddments eased with the Merino average MPG down by 6¢ (-1.4%).


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