Australian Wool market – AWI Commentary (31 March 2023)

Improving demand for fine and medium Merino wool continued at this week’s Australian wool auctions, despite the major indicator showing an unchanged value. There were some notable moves in those individual Merino sectors, highlighted by the handy 20 to 30ac gains on of the Western Australian (WA) quoted Merino types of mainly 19 to 21micron. That centre is currently providing a good portion of those regularly traded China types with lower vm (vegetable matter) levels the prime attraction to completing exporters orders alongside other tested readings.

The quality of the Eastern Australian offering was responsible for holding or depreciating prices in those two selling centres. In fact, within each micron grouping, the easier to place sale lots with attractive results were dearer for the week, but the sub-par types lowered more than the better types gained so an overall loss was recorded within some sectors. This was particularly in play on the final day of selling at the standalone Melbourne sale whereby a larger percentage of the harder to place lots were offered and price falls were felt across the board. 

Local exporters were the primary buyers this week, with some back-to-back weeks of trading opportunities providing renewed confidence for them to step in to fully support the market whilst continuing to juggle finances. With one keen eye on the upcoming single week recess in auction sales to provide some financial relief, there is a growing positive sentiment amongst buyers for the bettering fortunes of the market, particularly if logistics improve, offered quantities lower and quality improves.

Within the Merino sectors, Chinese buying remains dominant, but the ongoing interest from the Indian sub-continent and Europe has an important role in maintaining price levels and providing some impetus for potential improvement of the grower returns. The orders may be sporadic and less in volume from these destinations, but the impact they have on the auction scene is key, in addition to the alternate and viable manufacturing bases for wool textiles they provide.

The crossbred wool types have remained reasonably stable since the New Year, with predominantly Chinese buying holding the levels. This week saw the first comprehensive price falls for some weeks albeit just 15ac but that is a large percentage given the low-price base at present.

53,000 bales are rostered to sell next week on Tuesday and Wednesday

Source: AWI