AWI Australian Wool Market review (31 March 2017)
Australian wool markets were dominated by large adjustments this week in the Merino sector. Unfortunately, this was all to the negative side, flowing on from the weaker conclusion to the previous week’s selling. Price levels were highly variable from the outset on all Merino wools, with large discrepancies apparent on relatively minor difference in tested specifications.
By the close of selling, all Merino types were being quoted at a general 60ac clean/kg lower, whilst the carding and crossbred sectors were far less affected and remained unchanged to 20ac cheaper. The AWEX Eastern Market Indicator (EMI) fell away 44ac clean/ kg from its highest ever recorded level to 1502ac clean/kg.
Demand for prompt and short term shipment appears to have been met for the interim. After weeks of highly escalating market levels, the Merino wool values also seemed to hit a price point that just could not convince manufacturers to book forward contracts at these rates. Subsequently prices could not be sustained, as local auction buyers quickly interpreted the radical change in sentiment and reverted to safety mode by just cherry picking the selection at ever decreasing buy in levels.
Aiding in the particularly awkward and rapid change in direction were that local auctions have recently been loaded up weekly, at short notice, of volumes between 10 and 20% more. This push of quantity onto the market was not over the top by any means but is indicative of the fragile nature of the demand v price relationship, relative to the immediate wool availability. This extra volume assisted in easing purchase pressure on sale room operators and in a shorter time frame than originally forecast.
Many of the local exporters, and more importantly, our overseas users had fully expected the maintenance of the price at least until the upcoming Easter break.
Price levels in the Merino segment were being quoted on average as 60 to 80ac clean/kg cheaper, but the make up of those published indicators actually mask the micro movements within those micron brackets.
In the better types suitable for European and Indian delivery of 19 micron and finer, prices were actually almost fully maintained for the week, albeit in the minor quantity available.
The major Italian operator was unbeatable once again, particularly in the 17.5 to 19 micron area. Away from those better wools, price nuances were radical as well with FNF types (less than 1%vm) of all microns holding on comparatively well at just 25 to 30ac lower whilst the lower specified and higher vm (more than 1%) wools were hardest hit and well over 100ac clean kg cheaper for the week.
All carding types remained well sought after and prices avoided the downturn experienced in the longer wools. The comeback and crossbred wool (25 to 30 micron) were also sold to a much better tone and prices were just 5 to 15ac clean kg lower.
49,000 bales is to be offered next week which will surely test again the ability of the market to hold prices at current levels. Passed in rates were high this week, but that in some degree was due to rapid movement as opposed to price.
All 3 centres are in operation, with Melbourne offering 55% of the offering.