AWI Australian Wool Market Commentary (10 February 2017)
The keen purchasing interest continued unabated at Australian wool auction markets this week. Price rises were registered across the offerings, with the Merino sector again being the main recipient of the spot buyers’ willingness, or rather, necessity, to pay more. The strength of the European orders in the rooms was intense and the better specified finer lots were heavily targeted and bought at ever increasing levels.
Pleasingly the crossbred and comeback type segments also recorded a bounce by the end of the week, making it a very good selling week for growers of all wool types. The Eastern Market Indicator (EMI) headed towards record territory once more, in a week which saw the millionth bale for the season being sold on Wednesday. The EMI concluded the selling week at 1437ac clean/kg which is 15ac clean/kg higher than last week, but is also the highest week-ending EMI level since the commencement of AWEX market reporting responsibility in 1994. When expressed in USD terms, the value of the EMI rose 10usc to 1096usc clean/kg.
The Merino sector of the market was dominated by the strong movements upwards of all types finer than 19 micron suitable for the Italian processing industry. The main Italian indent buyer took to the speciality sections of the wool sale catalogues with gusto, not only in the designated super fine sale at Sydney, but also the available in Melbourne. Targeting traditional crimping, best style and strength best top making and spinners types, the first day saw the Italian operator out-gunned on some lots by traders, probably covering forward sales to that same destination and to a lesser extent India. The second day saw a larger offering of the traditional wool types and the Italians were rarely beaten on anything they bid on. This interest in this wool description must be very pleasing for those growers who have kept the faith in growing that specialty wool type. They are extracting healthy premiums at auction and in some super and ultra fine micron brackets this equated to 200ac to near 500ac clean/kg premiums being paid above the market.
Away from the specialty wools, the general Merino fleece market performed admirably and good gains were recorded against most micron brackets, albeit with the lower specified, harder to place lots struggling to maintain values. 19.5 micron and finer was where the most pressure was being applied and the better tested lots appreciated by a handy 30 to 45ac clean/kg.
The fine and medium (19.5 to 22 micron) Merino fleece sector sold consistently throughout the week and prices were barely changeable, although the broader end of this type spectrum did register a good gain but very few bales were sold. The burry (2.5%vm plus) fleece of all microns continue to surprise buyers expecting a fall and all descriptions actually met better competition and gained 25ac c/kg. Merino skirtings sold to the same sentiment as the fleece and all buyers, particularly the top makers, were extremely keen on building inventory from the outset. Super fine skirtings of low vm was the most sought after commodity and 40ac clean /kg was generally gained for these lines. All other merino skirting types and descriptions gained 15 to 25ac for the wools containing 4 to 8% vm (vegetable matter) and 5to 10ac for the heavier vm.
As with the fleece, of most interest were lots finer than 19 micron, and more-so lots finer than 18 which made up most of the selection. The few lots available of broader microns were maintained at established levels. Cardings sold strongly but to the similarly unchanged levels with just a small 10ac rise seen on stained lots. A good reversal of fortunes was received this week on the comeback and crossbred market finer than 30 micron. Prices stabilised early in selling but appreciated strongly on the final day to gain 15 to 20ac clean/kg. These price rises were mainly restricted to those wools correctly prepared, with most un-skirted lots (d-certs) being critically valued by buyers and as such receiving discounts, which were considerable in some cases. Types broader than 30 micron continue their fall and a further 5 to 10ac clean/kg was lost. Almost 48,000 bales go to auction next week, a figure 12% higher than advertised last Friday. That volume usually is a test of the markets resolve, but the current sentiment suggests that there is quite a bit of covering and forward buying left to complete, so positivity should greet the start of the week.