Stronger demand for Merino non-fleece wools

Australian Wool Industries Secretariat Inc (AWIS) releases wool sales report for week ending September 28. The Australian Wool Exchange (AWEX) Regional Indicators finished 0.9% lower, on average, at sales in Sydney, Melbourne and Fremantle this week when the US exchange rate rose by 0.3% The EMI was down by 0.6% in Australian currency and by 0.4% in US currency.

The market started in a similar manner to the previous week, with an easing in the Merino fleece wools, and with generally stronger demand for the Merino non-fleece wools. Crossbreds also appeared to do better than the Merino fleece wools. These trends followed a pattern that has been seen in most of the last five to six weeks. 23 and 24 micron wools were in limited supply and were least affected.

Thursday was a generally better day, with most AWEX MPGs (apart from the22 to 24 micron wools) remaining firm, or slightly up in the North and the South. There were further falls in the West, possibly because most orders were filled earlier in the day in the Eastern States sales.

Overall, the finer wools did a little better than other Merino wools. A rise in the US exchange rate on Thursday meant that the change in the Eastern Market Indicator (EMI) in US currency was plus 6¢for the day.The EMI is 253¢(-21.2%) less than in the same week last year and 130¢(-12.1%) less than at the start of the season. The WMI is 243¢(-20.6%) less than in the same week last year and 137¢(-12.7%) less than at the start of the season.

In other countries, the South African Cape Wools Indicator was down by 0.8 %% in Rand and by 1.1% in US currency since last week. In New Zealand, the Wool Services International crossbred Indicators were mixed, with fine crossbred fleece quoted as 2.5 to 5% cheaper and coarse crossbred fleece as 2% dearer.

Among other fibres, cotton Futures up to July next year all fell by 3.0 to 3.5%. December Futures fell steadily all week to 70.65¢on Friday, down by 3.5% since the previous week and down by 6.9% over the two week period.

35,633 bales were on offer, compared with 41,074 bales last week. 7.4% were passed in, comprised of 6.6% in Sydney, 7.2% in Melbourne and 9.3% in Fremantle. Pass-in rates for Merino fleece and skirtings were 8.6% and 4.1%, respectively.

33,002 bales were cleared to the trade.

Offerings continue to be below last year’s levels. This week’s offering was 13,809 bales (-27.9%) less than the same week last year). The year-to-date offering is 64,917 bales less (-14.2%) than at the end of the same week last year.

The outlook is more promising for the next three sales, with the progressive difference expected to be in the order of minus 9% to minus 10% at the end of that period. The US exchange rate rose sharply on the Friday following the previous wool sale, but the eased during the week, before strengthening on Thursday. Financial analysts attributed Thursday’s lift to a large increase in liquidity in China.

The view among financial analysts appears to be that there is a better than 50% chance that the Reserve Bank will lower the cash rate by 0.25¢on Tuesday.

It was another good week for skirting types, which generally lifted in price, or held firm during the week; and closed on a strong market. Crossbred types had a generally good week. The market eased slightly on Wednesday, but made gains on Thursday. Oddments were a bit mixed, but mostly had a reasonable week, including a good finish on Thursday.

Buyers for China were dominant this week, followed by strong support from buyers for Europe and India. Highlights from the Australian Bureau of Statistics export data for July for the top five export destinations and three other key destinations follow.

Sales will be held in Sydney, Melbourne and Fremantle next week, when 47,060 bales are currently rostered for sale. Present estimates for the following two sales (Weeks 15 and 16) are 40,913 and 48,150 bales, respectively; an increase of 7.0% over the three sale period when compared with last year.

The New Zealand Merino Company is rostered to offer 1,950 bales in Melbourne next week and 2,000 bales in Week 16.