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Prices turn in buyers' favour at Australian wool auctions

May '19
Pic: rawpixel.com from Pexels
Pic: rawpixel.com from Pexels
A pragmatic approach to purchasing by a majority of buyers saw the market going largely in buyers’ favour at Australian wool auctions this week. The AWEX Eastern Market Indicator (EMI) retreated by 8ac or 0.41 per cent to close at 1952ac clean/kg. The EMI when expressed in USD was again much weaker than the AUD levels and fell to 1362usc clean/kg.

“The week’s operations featured the continued weakness of the two largest Chinese indent operators within the merino fleece. This lack of purchasing intent saw that sector flounder and drift downwards, as the exporters that were interested were advantaged and this allowed the price to drop back to their ideal levels,” the Australian Wool Innovation Limited (AWI) said in its ‘Wool Market’ weekly report for sale week 45 of the current season.

“As the two big guns from China basically sat out from this week’s purchasing activity again, in the merino segment, the processors and top makers took the opportunity to load up their inventory levels once more. The absence of the normally stiff competition of the indent operators, who represents mainly the China-based trading companies and smaller mills who don’t have their own import and international banking set ups, allowed a general freedom in price determination as the Australian exporters looked to the top makers to ascertain what buy-in levels they should pay, or have to pay to satisfy prompt needs,” the report added.

With all wool imports still banned into China from South Africa, the prompt machinery demand must chiefly be met by Australian supply, hence the heavier purchasing activity percentage by the two largest Chinese top makers at the top of Australian buying lists. At this stage of the season with just 7 weeks of selling left, there has been a staggering 248,004 less bales sold through the auction system than at the same period of last season. This represents a reduction of 15.7 per cent which far exceeds the AWTA key test data which shows a 10.3 per cent year-on-year retraction of all wool tested.

Mainly affected are high quality superfine wool clips and various forms of audited compliancy schemes clips being the areas of production most likely eliminated from the auction figures. In addition, many of the purchasing operators are now represented by direct buying operations in the regional areas, which would be almost exclusively direct to export and bypassing the auction system.

Australian wool export figures from March show China lifting its market share from 71 to 73 per cent for the current season. This falls short of the 76 per cent of a much larger offering last season, but with a quarter of the seasons numbers still to come in, that per cent is likely to lift again.

Merino fleece and skirtings fell 15 to 25ac during the week, while crossbreds gained 15ac and cardings remained unchanged to 5ac dearer.

There are 33,361 bales scheduled for auction next week. (RKS)

Fibre2Fashion News Desk – India

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