The EMI when expressed in USD experienced greater fallbacks than the AUD level. The cumulative effect of the lower AUD v USD forex rate (-0.9 per cent) and the falls at auction saw the USD indicator 3.9 per cent lower or 53usc to finish at 1309usc clean/kg. The USD indicator has not been at this level since mid-November 2018 and has since averaged 1385usc for the six months until now. The seasonal average so far is 1405usc, which is accentuated by the AUD v USD forex rate eroding from July 2018 level of 0.7378 to current rate of 0.6914.
Buyer confidence appeared to desert the market, and there was unanimous pre-sale sentiment this week that prices would fall, Australian Wool Innovation Limited (AWI) said in its ‘Wool Market’ report for the sale week 46 of the current season.
“The lifting of the Chinese ban on imports of South African wool, albeit with caveats, and the imposition by the US of import tariffs on Chinese goods produced a state of nervousness in trade. This hesitancy has not been seen since October 2018 when a general lack of business saw the market lose 5 per cent or almost 100ac in just a week. Back then it took three weeks for the confidence to return and the market settled then moved to a positive trajectory and continued to slowly appreciate to fully recover the losses in three months,” the AWI report said.
“The passed-in rates had a significant part to play at sales this week, as wool growers resisted the lower prices being offered. 16.4 per cent of the Sydney offering was eventually passed in, with Melbourne 17.5 per cent, but in Fremantle, that rate escalated substantially to 40.6 per cent with the Merino fleece segment in Fremantle recording a passed-in rate of 45.3 per cent. The national passed-in rate was 21.7 per cent,” the report added.
Mere 25,637 bales are on roster for auction next week. “The following two weeks of selling after that average just 27,000 bales per week, so amidst the general gloom of this week, any slight shift up in demand will see the market turn positive due limited supply,” according to AWI. (RKS)
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