Declining value of Australian dollar impacts this week's wool auctions

“Some individual sale lots returned over 100ac better than last week, with most pressure being placed upon the 20 micron area,” the Australian Wool Innovation (AWI) said in its commentary for the sale week 50 of the ongoing wool marketing season.

“It was not all positive though as the sale returns for the crossbred wool types and cardings barely held their current values. Most of these wools were selling to the buyers’ favour for majority of the week. Just a few cents were gained on the very small offering of the true to type and prepared correctly 29 to 31 micron sale lots, but all others lost 5 to 10ac. Cardings sold under a tough atmosphere and losses of 5 to 20ac eventuated by the close,” the AWI commentary said.

The Eastern Market Indicator (EMI) gained 29ac this week to climb to the season high of 1467ac/clean kg. On the surface it points at positive results, but diametrically opposed fortunes were the outcome depending on type. Additionally, when looking at the USD EMI actually falling by 9usc for the week to 1027usc/clean kg it is clear that forex rates had plenty to do with local AUD auction prices accomplished.

The WMI (Western Market Indicator) gained 73ac or 4.9 per cent to 1563ac, which represents two weeks of market rises after not selling last week.

Apart from the WMI, the general market indicators masked the true market signals this week. The averaging nature of these simple directional tools were not indicative of current conditions. That is, according to AWI, “strong demand for Merino fleece and skirtings, weaker demand for cardings and the continuation of the extremely low levels of interest for crossbred wool types of all descriptions.”

Merino types gained from 40 to 80ac for the week, with sale lots having lower VM (vegetable matter), good strengths and higher yields taking the higher edge of that range of gains. Cardings struggled to find firm levels of trade on almost all types throughout the week, and despite the cheaper US prices available to overseas customers, prices drifted all week. Crossbred wool descriptions followed that similar pattern but managed to hold, AWI said in its commentary.

After dominating auction rooms for almost the past month, the Chinese top makers and manufacturers were matched and often outbid this week from locals and traders. The first stage manufacturing purchasing intent remained strong but as prices rose, they became more price sensitive.

Around 31,000 bales will be on offer at next week’s sales which will see just two selling centres in operation, as Western Australia (Fremantle) will not be offering any wool for sale.

Fibre2Fashion News Desk (RKS)