Wools price adjustment not all bad

The news wasn’t all bad in the wool market as the EMI in US currency set a new record level 1540c when it lifted 7USc/kilogram. Photo by Laura Ferguson.

The news wasn’t all bad in the wool market as the EMI in US currency set a new record level 1540c when it lifted 7USc/kilogram. Photo by Laura Ferguson.

In the last few weeks the Australian wool market has lifted rapidly auction after auction, but last week the fast paced price gains took a small step backwards.  

The AWEX Eastern Market Indicator (EMI) finished at 2011 cents per kilogram (clean), 16c lower than the previous week. 

This is only the second time in the nine sales since Easter that the EMI has fallen, while the value of the EMI has moved from 1772c to 2011c over the same period. 

Across the board there were price adjustments and despite the small offering due to no sales in Fremantle, most categories retracted from the outset on Wednesday. 

It was the smallest offering seen this season with 26,942 bales offered nationally, compared to 30,439 the previous sale and 3.6 per cent of the offering was passed in compared to 2.3pc the week before. 

But the news wasn’t all bad as the EMI in US currency bucked the AUD trend and set a new record level 1540c when it lifted 7USc/kilogram. 

To quote the Australian Wool Innovation report: “this USD EMI figure as indicative of the underlying continuing strength of demand”.

Export buyers committed to continuing their accumulation of all Merino types 19.5 micron and broader, while they were prepared to let the finer end of the Merino market drift. 

The biggest gains in the Sydney sales were 21 and 22 micron fleece lines, both lifting 15c each and in Melbourne 23 micron gathered 13c. 

Finer microns bore the brunt of the price resistance with the largest losses to 17 to 19 micron wools down on average 40-50 cents in both Sydney and Melbourne. 

Landmark south-east wool manager, Stephen Keys said a slight decrease had to come sooner or later. 

“We have had increases for the best part of 18 months so for it to come to a little bit of a halt, is not a bad thing,” he said.

“It gives everyone a bit of breathing time to work out where they are heading, particularly with the smaller offerings over the next four weeks.”

This week less than 30,000 bales are on offer, including Fremantle who didn’t sell last week.

“I think that the very high market and the extremely low offerings are probably unchartered territory for a lot of the exporters,” Mr Keys said.  

“But I believe these current levels are reasonably sustainable heading into the spring flush.

“We will certainly see some decreases, particularly when we do start to see some reasonable offerings come back through, which may not be until September.

“But definitely the talk between the exporters and the processors at the moment is they still need the wool and are still prepared to pay reasonable levels for it.”

He said in terms of spring flush levels, he is not sure the larger offerings will go back to the levels we have seen in previous years.

“The factors that will play a major role in the size of these offerings coming through other than the dry season are shorter shearing cycles and the amount of wool held over to be sold in the new financial year,” Mr Keys said.  

“Normally there is a large amount of wool that has been held over to be sold in the new financial year, but most people have been selling straight away with the high market.

“From Landmark’s point of view we are on a record low as far as wools on hold go and I think all brokers would be in the same position. 

“That will have to have a big impact on the offerings in August and September.”

South Africa has had its last sale for the season and wont return to holding auction sales until August 15 which will force all buying attention on Australia for the next two months. 

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