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Australian Wool Market (25 September) Commentary from AWI

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Australian Wool Auction markets exhibited signs of life last week, as the Merino fleece sector seemingly arrested the downward trend for the moment. Whilst opening slightly softer, some positive signals were forthcoming from India and China and to a lesser extent Europe throughout the week. This gave most of the local buyers the confidence needed to commence covering old sales, buying inventory or the willingness to sell forward. A slightly weaker EMI (Eastern Market Indicator) of 1228ac/clean kg was the result, which represented a minor loss of 6ac/clean kg for the series.


Merino fleece opened the sales at levels of 5 to 10ac/clean kg lower and traded through most of the week at the lower levels. A late rally on the final day saw prices recover somewhat, as much stronger and more widespread competition was in evidence. Similarly to last week, the sentiment is gradually improving as exporters build more sales into their forward order books, and indent operators return slowly to buying. The better style and strength types finer than 18.5 micron continue to track to their own path, and once again avoided any of the losses as experienced by other sectors, and in fact managed to conclude the week at levels of 5 to 15ac/clean kg higher. Merino skirtings again tracked to similar movements as the Merino fleece market.


Crossbreds of all types and descriptions continue to drift back in price. A new level at 10 to 20ac/clean kg lower was established this week as the impending higher volumes and lacklustre sales of these types impact on the urgency to buy from users.


Carding wools of most types and descriptions sold under firm unchanged market conditions this week. Small pockets showed some weakening tendencies, but not to any major degree. Buyer interest remains at a high, although the major competition is now being restricted to just two of the larger operators within this sector. Prices for all carding types remain extremely close to the prices being paid in all other market segments, and most buyers are expecting an adjustment to widen the price gaps. Most buyers remain relatively undecided how, but most are leaning towards the theory that demand will see cardings firm whilst better interest will see the fleece and skirtings pull away.


This week has a market testing 42,000 bales rostered to sell Australia wide. With prices relatively stable for much of this week, a similar scenario is forecast, with no great expectations of any significant changes to price levels. Indent orders from China and the sub continent may positively influence the market if they are forthcoming, as the Aussie dollar continues to slide and goes to the advantage of those using USD to purchase wool.


68 tons were traded this week across a broad range of microns and delivery times. 18.5 micron traded ac / clean kg at 1385, 21 micron at 1260/1270/1275, 28 micron at 855, 30 micron at 810.



Deliveries October through to February


The forward markets mirrored the auction with buyers early in the week reluctant to commit. The Australian Dollar reversing it’s upward trend we saw better levels Tuesday with growers hedging some new year crossbreds at historically high levels. Merinos traded steadier higher and traded for late October slightly over cash on Thursday.

Southern Aurora will commence brokering four deliverable con-tracts that reflect the major China traded types 18.5, 19.5, 21.0 and 28.8. Exporters have expressed the need to have a delivera-ble contract in addition to MPG index contracts to help increase liquidity and ensure convergence as maturity approaches.


Source AWI


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