Wool price levels retract in Australian markets

The Australian Wool Exchange - Eastern Market Indicator (AWEX EMI) registered a 57ac reduction for the week to close at 1744 ac clean/kg. In USD the EMI fared better but still slipped 36usc lower to 1398usc clean kg. However, when expressed in AUD, the EMI is 23.5 per cent higher compared to 12 months ago. And more significantly, the demand-indicating USD price for the EMI is 31.5 per cent higher than the price at this time last year, Australian Wool Innovation (AWI) said in its ‘Wool Market’ weekly report.

“General thoughts from the trade pre-sale were rather negative apart from the merino fleece sector. More important was the general consensus post-sale that whilst prices eased off 35ac clean/kg on better types across most of the merino types, the fundamentals within that trade area have not changed,” the AWI report said.

“Demand has simply not turned off, but price to match demand is just being allowed to adjust to more useable levels. In fact, some small gains for wools finer than 18 micron were recorded for the week,” it added.

However, the urgency for purchases has been somewhat alleviated by the past few weeks buying. Overseas users now seem to have a 4-6 week buffer of inventory built up so further purchases do not need to be concluded immediately. Local buyers in Australia are not willing, or indeed have the funds, to take on stock at the perceived “high” levels in anticipation of that fresh business occurring, so they are prepared to let the market drift for the time being to find that sweet price spot that manufacturers seek.

Of most change this week was the drastic reduction across all of the carding sector. Some individual losses were as much as 300ac lower or verging on 18 per cent, but all wools making up the carding segment averaged reductions of around 190ac clean/kg. In reality these wools are coming off enormous record levels so this type of price adjustment was said to be coming, but the downturn surprised all by the magnitude of the losses and the velocity of the movement within just one week of selling.

The current downturn in merino is expected to be a brief respite, as drought conditions both in Australia and South Africa continue to be dangerous for upcoming supply numbers.

Sale week 31 will have over 42,000 bales for sale and “it will be most interesting to see the grower sellers reaction to the lower market.” (RKS)

Fibre2Fashion News Desk – India