Curtis Wool Direct

Australian Wool Market Report (AWI) 27 April 2018

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All signals led to a dearer market this week at Australian wool auctions, and on the surface those expectations were largely met, but with some overriding caveats. Some extravagant gains were made on local markets, particularly within the comeback and crossbred sectors (24 to 32 micron) which is a break away from season-long trends. Indicative of this was the 25 micron price guide lifting by an extraordinary 149ac.

Within the Merino sector though, a substantially weaker AUD (Australian dollar) masked some weakness of demand for the current deteriorating quality of wool on offer due to adverse seasonal conditions across the nation.

In another historic week, the AWEX (Australian Wool Exchange) EMI (Eastern Market indicator) set new all time records for both the daily high EMI of 1847ac and a week-ending record high of 1846ac per clean kg. This represents a 21ac increase for the week.

To put these price returns in perspective, this is 23% or 345ac higher than at the same sale week of last year. Significantly this has occurred when we have had over 50,000 more bales sold through auction than at the same period last year.

2017/18 Week 43 EMI: 1846ac

2016/17 Week 43 EMI: 1501ac

2015/16 Week 43 EMI: 1217ac

2014/15 Week 43 EMI: 1153ac

 

The AUD v USD forex (foreign exchange) took a savage reversal this week, with a week-on-week depreciation of 3% from .7804 down to .7574.

Good news for those USD users overseas and usually a stimulus for good advances locally, but this was not the case as prices moved to margins of just one third of that currency advantage.

The EMI when expressed in USD (US Dollars) closed out the selling week 26usc lower at 1398usc clean kg. Most of the USD losses were due to stagnant prices of a large portion of the Merino sector.

This USD EMI though is outperforming the AUD prices and where we sit now is 24.5% higher than last year in US dollar terms.

2017/18 Week 43 EMI: 1398usc

2016/17 Week 43 EMI: 1124usc

2015/16 Week 43 EMI: 951usc

2014/15 Week 43 EMI: 893usc

 

In the Merino segment of the auction offering, the general lowering of recent wool quality is increasingly causing many price anomalies. Price discovery is now wildly erratic with yield, staple length and nkt (strength) becoming growing factors in price determination, on top of the season long factors of fibre diameter, poBm (position of break Middle) and cvh%(co-efficient of variation hauteur), making for more complicated batch finalizations for exporters. As such, some very large variation in sale results for wools of similar micron and vm (vegetable matter) are now commonplace.

The large majority of Merino price indicators of 16 to 21 micron were largely unchanged for the week but within those variations of plus or minus 40ac were individually changed dependent on quality. Comeback and Crossbred wools (24 to 32 micron) enjoyed the best gains of all wool types and appreciated by a general 70ac.

Competition was intense throughout. Cardings remained unchanged. Next week sees another 43,000 bales scheduled to sell. Strong, but irregular interest due to quality is expected to continue.

Source: AWI

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