AWEZ wool indicator stays steady last week (Australia)

Australian Wool Industries Secretariat Inc (AWIS) releases wool sale report for the week ending April 27. The Australian Wool Exchange (AWEX) Regional Indicators finished 0.2% lower, on average, at sales in Sydney, Melbourne and Fremantle this week when the US exchange rate rose by 0.3%. The sales were held on Tuesday and Thursday because of the Public Holiday for Anzac Day on Wednesday.

It was a much steadier market this week, after the falls over the last four sales. It was also a smaller sale than the 49,400 and 55,600 bales offered in the last two sales. Tuesday’s sales saw small changes in the Merino Micron Price Guide (MPGs) in the North and the South and a mixture of direction of movement in the West. A similar pattern emerged on Thursday, except in the South where there was a very slight easing.

Crossbred types continued to do well; and again had a slightly better week than the Merino wools.

The quality of the offering continues to be down as the season moves well into autumn. There is the additional problem of faults caused by the heavy rain in late summer/early autumn, particularly among skirtings.

FNF wools were in good demand, whereas the higher VM and poorer types were discounted.

In looking at comparisons with the same week last year, there was no sale in Week 43 last year as it was the week of the Easter break. The comparisons presented below are confined to the season averages to date for the Eastern Market Indicator (EMI) and the WMI.

The season average Eastern Market Indicator (EMI) remains at 1222¢, which is 140¢ higher than the season average at the end of Week 43 last year; and the Western Market Indicator average remains at 1221¢, 163¢ higher than at the same time last year.

In other countries, the Cape Wools Indicator was down by 0.1% last week’s sale. The Rand to the US exchange rate was down by 0.7%. In New Zealand, the various coarse crossbred indicators were down by 1 to 3%.

Among other fibres, May futures for cotton were up by 0.8% from last week to close at 90.79¢ on Friday.

In a much smaller sale, 38,103 bales were on offer, compared with 55,594 bales last week. 11.2% were passed in, comprised of 8.1% in Sydney, 9.9% in Melbourne and 18.5% in Fremantle. Pass-in rates for Merino fleece and skirtings were 9.7% and 18.3%, respectively. 33,853 bales were cleared to the trade.

The year-to-date offering is 46,326 bales less (-2.8%) than at the end of the same week last year (see table below). This is expected to improve slightly to -2.4% over the next three sales if the current estimates for that period remain relatively unchanged.

The US exchange rate has been influenced by two significant, but opposite, effects this week. Firstly, all financial analysts are tipping that the Reserve Bank will lower the official cash rate when it meets on Tuesday, following the low CPI data announced on Tuesday. This led to the fall in the exchange rate on Tuesday. The rise in the exchange rate on Thursday was attributed to some good company performances in the United States and an indication from the US Reserve that there may be further quantitative easing (putting money into the economy).

China announced that the Yuan will be fixed at 6.28 Yuan. This was described as a record low level.

The week-on-week changes in the Merino average Micron Price Guide (MPGs) were relatively small in either direction this week.

There is no data for the comparison with the same week last year as it was the week of the Easter break in 2011.

The skirtings offering continues to be quite mixed, with a significant number of lower types such discoloured, cotty or with high VM wool again on offer. Better types were in good demand, but the poorer types were all discounted. Skirting types again had a higher pass-in rate (18.3%) than fleece types (9.7%)

Crossbreds continued their good run; and again had a better week than Merino types. Oddments had a mixed week, but generally moved downwards.

Buyers for China were dominant this week, followed by strong support buyers for Europe, India and Taiwan.

Sales will be held in Sydney, Melbourne and Fremantle next week, when 45,132 bales are currently rostered for sale. Present estimates for the following two sales (Weeks 45 and 46) are 40,260 and 42,300 bales, respectively; an increase of 2.9% over the three sale period when compared with last year.

In South African sales, the Cape Wools Indicator was down by 0.1% since last week against a 0.7% appreciation of the Rand against the US Dollar and a 0.1% depreciation against the Euro. 6,796 bales were on offer.