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Wool market drops; Skirtings in strong demand

24
May '10
The Australian wool market finished 0.1% lower, on average, at sales in Sydney, Melbourne and Fremantle this week when the US exchange rate fell by 7.7%. It was a week when global financial issues had the greatest influence on the market.

45,159 bales were on offer, compared with 39,966 bales last week. 12.6% were passed in, comprised of 9.6% in Sydney, 9.9% in Melbourne and 24.7% in Fremantle. Pass-in rates for Merino fleece and skirtings were 13.9% and 11.4%, respectively.

1,626 bales (3.5%) from the expected offering of 46,785 bales were withdrawn prior to sale and re-offered bales made up 16.2% of the final offering. 39,460 bales were cleared to the trade.

The Greek / European financial circumstances overflowed into a critical loss of economic confidence this week that saw the US exchange rate fall by 7.7%, the largest week-on-week fall since the 12.5% fall from 79.08¢ to 69.16¢ in the second week of October 2008. The Euro exchange rate was also affected, falling by 4.1% on Thursday and by 5.3% since the previous Thursday. Both rates fell further on Thursday night and early on Friday before closing at 83.05¢ and 65.82¢, respectively.

The fall in the US exchange rate held the EMI at a relatively unchanged level (compared with the fall of 62¢ in US currency), rather than translating into a higher prices in Australian currency. This was due to the negative impact of the impaired global confidence on commercial and domestic demand.

The market opened with some uncertainty on Thursday and the trade reports that there were some inconsistencies in the market. Nevertheless, competition was good and the smallish offering of better fine wools was again in good demand with premiums being paid. Conversely, poorer wools were less keenly sought.

Skirtings were in strong demand on Wednesday, apart from the higher VM types in the West. Prices remained firm, or slightly up, on Thursday. Crossbreds were again in good demand, with their average AWEX MPGs up by from 0.8% at 26 microns to 1.5% for 28 microns. Oddments continued to ease, but at a lesser rate than in recent weeks. The average AWEX Merino Cardings Price Guide fell by 4¢ (-0.7%).

Buyers for China were again dominant followed by buyers for India, Korea, Europe and Taiwan.

Sales will be held in Sydney, Melbourne and Fremantle next week, when 41,065 bales are currently rostered for sale. Present estimates for the following two sales (Weeks 49 and 50 [North and South only]) are 38,260 and 28,000 bales, respectively; an increase of 8.0% over the three sale period when compared with last year. Sales are in recess in South Africa.

Click here for tables & chart:

Australian Wool Industries Secretariat


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