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AWI Australian Wool Market Commentary (28 November)

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A major consolidation and clear demand signals were features of this weeks’ selling at the Australian wool auction sales. The entire Merino fleece offering stayed under good competition and prices remained generally firm, give or take a few cents.  Crossbreds continue to wilt under a slowing demand, whilst the positive story of the week was the strength within the cardings sector and also the merino skirtings.


Not much change occurred on the major trading currencies during the auctions so it was a week where it was up to the offering and physical orders to give direction.  Amongst all the changes within types the Eastern Market Indicator (EMI) managed to stay rock steady at the 1331 ac/clean kg mark, unchanged on a daily basis and week to week.


Within the Merino fleece sector the continued re-emergence of the largest Chinese indent buyer was key. After having been quiet (compared to their normal pattern) since the commencement of the season, they took to purchasing very aggressively, as was signalled at the end of last week.


On many wool categories, in mainly Fremantle and Sydney, they were almost unbeatable as they looked to source volume from the outset. Their weekly tally came in at just short of 5,500 bales or nearly 25% of the total volume on offer within the sector.


A largely unchanged price occurred as all other exporters seemed to just buy what was absolutely needed for covering, and not willing to take on the larger buyer and push the market up.


Merino skirting prices hit levels of 25ac/clean kg better this week, as top makers looked to secure a higher percentage of the offering. Stiff competition was provided by the larger trading houses looking to cross off some of their outstanding forward positions.


Of particular interest was the lower vm types finer than 18.5 micron, with odd lots peaking at 45ac clean dearer.


The last two weeks has seen a significant surge in interest for all types within the Merino cardings sector. Whilst low supply was certainly playing its part in the upward push, a strong advance in demand, mainly from Chinese factories, has seen price levels appreciate a further 20 to 40ac clean kg.


Types suitable for scouring are being extremely well sought and in many cases, sale lots were being bought at levels 50ac better than the previous week.


The crossbred offering (26 to 30 micron) continued the cheaper trend of the season so far, and a general 20ac/clean g was eliminated from the values.


For those types broader than 27 micron the price levels are hitting what most appear to be attractive levels for manufactures and speculators alike.


Volumes next week have grown by 5,000 bales since last Friday so now almost 50,000 bales goes under the hammer. The current and clear trends in place at the moment are expected to continue, with Merino firm, cardings dearer and crossbreds lack lustre. After next week auctions quantities on offer will be back to “normal” levels, so next week may provide good buying opportunities, given demand is good and there is only 7 weeks of sales left pre Xmas.

Source: AWI

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