Prices rise in AUD but dip in USD at Australian wool auctions

“The robust signals were emanating from the biggest traders looking to cover off their risk and lessen exposure to sales made over the recess,” the Australian Wool Innovation (AWI) said in its commentary for sale week 43 of the current wool marketing season.

The Eastern Market Indicator (EMI) closed 10ac higher at 1377 ac/clean kg, whilst the EMI when expressed in USD weakened by 42usc to close the week at 977 usc/clean kg. The Western Market Indicator (WMI) added 13ac to be 1430 ac/clean kg by the close of selling. The national clearance was 89.2 per cent, which was high when compared to the previous six weeks of declining prices.

A significant and vastly differing result though was recorded on the US dollar price levels for wool, which dropped by more than 4 per cent when compared to two weeks ago. The Australian dollar has depreciated notably (4.7 per cent) against the USD as global equities push higher, the US raises rates to counter inflation and the markets move in favour of the USD as it benefits from the ongoing deterioration in risk appetite. The AUD held up much better against all other major currencies.

“Our major customer being China (80 per cent plus of our wool exports) is facing major hurdles presently, both manufacturing and its population. Rolling shutdowns of factories and the particularly strict lockdowns in attempts to tame the COVID-19 spread are impacting heavily upon people’s lives and the “normality” of businesses. Just two years ago the shipment of wool was a three-week process. It now is a minimum of eight weeks just to get the cargo through the receival ports in China,” the AWI report added.

Through all these challenges, China remains supportive and a strong buyer of Australian wool, although the past few weeks have seen a resurgent European and Indian presence underpinning the wool markets. The prices for the better specified (better strength, style and lower vm) sale lots have moved noticeably ahead of the pack and are commanding most of the buyer’s attention. Increasing discounts are being applied to poorly prepared clips with the colour and cotted visually appraised lots being most affected.

“Prices remained remarkably strong throughout the week and gains of 5 to 25ac was extracted from our buyer exporters across the type spectrum. Global traders were dominant on the purchasing lists, but a lift in buying activity from the big three top makers (two Chinese, one European) was witnessed towards the close of the selling week,” the report said.

There will be a drop off in volume to 41,000 bales in next week’s sales when selling will take place only on Tuesday and Wednesday.

Fibre2Fashion News Desk (RKS)