AWEX wool indicator up 1.4% from last week (Australia)

Australian Wool Industries Secretariat Inc (AWIS) releases wool sale report for the week ending June 22. The Australian Wool Exchange (AWEX) Regional Indicators finished 1.4% higher, on average, at sales in Sydney and Melbourne this week when the US exchange rate rose by 2.1%.  The change in the Eastern Market Indicator (EMI) in US currency was 3.6% The market opened on the strongest note since the first week of May and prior to Greece’s inability to form a Government, when the Eastern Market Indicator (EMI) moved up by 2¢ on the first day of selling and by another 3¢ on the second day. 

There were small gains across all Merino micron ranges and types on Wednesday, particularly among the FNF wools.  This was followed by further gains on Thursday when the greatest gains were recorded from 17 to 19 microns.

Crossbred wools were up also. These gains were achieved despite a significant strengthening of the US exchange rate.  It was one of the few times that the Eastern Market Indicator (EMI) has moved up in US currency this season.

Trade reports indicate that there was some good wool of offer this week, which attracted some strong competition. The lift in the market had a buoyant effect on sellers, resulting in a fall in pass-in rates to less than half of last week’s levels. One can never be sure of the reasons for a change in the market after one week. 

Factors that could have had some impact include the size and quality of the offering and the lift in global economic confidence up until Thursday.  It was the smallest sale of the season both nationally and in Melbourne; and South African sales are in recess until mid-August.

The weekly Eastern Market Indicator (EMI) continues to be below the same week last year (-367¢), while the season average still remain up on last year’s season average.  The difference in the season average is now 64¢. In other countries, the Wool Services International crossbred indicators in New Zealand were down by 2 to 4% at the fine end, firm in the middle and down by 5 to 6% at the coarse end. Among other fibres, cotton December Futures rose early in the week, but were down by 2.7% to 69.12 US ¢ on Friday.

21,569 bales were on offer, compared with 32,693 bales last week (when all three regions sold).  6.1% were passed in, comprised of 5.3% in Sydney and 6.9% in Melbourne.  Pass-in rates for Merino fleece and skirtings were 5.5% and 8.3%, respectively.  20,261 bales were cleared to the trade.

The year-to-date offering is 38,689 bales less (-2.0%) than at the end of the same week last year. It is unlikely to change at all with only one more sale this season. The US exchange rate lifted sharply this wool selling week, remaining above 101¢ until Thursday night.  Financial analysts attribute this to a number of factors, including an improvement in global economic confidence, further expectations that Ben Bernanke will announce a third round of “quantitative easing” (printing money) this week and the success of the pro-austerity parties in Greece.

But, serious concerns still remain in the Eurozone; and the downgrading of the credit rating of 15 major banks by Moody’s on Thursday night (Australian time) had a major negative impact on economic confidence and the US exchange rate.

It was a good week for skirtings type also, with prices moving up on both days.   Pass-in rates followed the downward trend of other types and at 8.3% were well below those of last week.

Crossbred wools were either too few in number to quote, or their prices moved up by similar amounts to those of medium Merino wools.

Oddments also had a better week after several weeks of mostly downward movements.  The average AWEX Merino Cardings Indicator was virtually unchanged. Buyers for China were dominant this week, followed by strong support from buyers for Europe and India.

Sales will be held in Sydney, Melbourne and Fremantle next week, when 29,269 bales are currently rostered for sale.  Present estimates for the following two sales (Weeks 01 and 02) are 31,400 and 37,800 bales, respectively; a decrease of 24.0% over the three sale period when compared with last year.   Auction quantities are invariably difficult to forecast at this time of the year.  History shows that here can be some sudden fluctuations

Sales are in recess in South Africa until 15 August.