Optimism in Australian wool market as prices rise

Australian Wool Industries Secretariat Inc (AWIS) releases wool sales report for week ending October 12. The Australian Wool Exchange (AWEX) Regional Indicators finished 1.6% higher, on average, at sales in Newcastle, Melbourne and Fremantle this week. The US exchange rate rose by 0.6%, taking the change in the Regional Indicators to +2.2%. It was another good market this week, with a good sale in Newcastle; and in Melbourne and Fremantle.

There were rises in all wool types and across nearly all micron ranges. The strength of the market was reflected in the very low pass-in rates in all centres. There appeared to be more optimism than has been the case in recent weeks.

Newcastle got away to a good start on Tuesday when it was the only centre selling. There were large rises in the AWEX Micron Price Guide (MPGs) up to 17.5 microns and good premiums for the top wools that continued throughout the week. Trade reports say the market finished on a very strong note on each of the three selling days. While the Italian presence was very strong, there was also some strong competition from China.

The Southern and Western Markets also opened strongly on Wednesday, with the greatest gains being up to 18.5 microns. The fine wools, and up to 20 microns, were the strongest performers in Melbourne on Thursday.

Overall, a good week, particularly for the fine wool growers. The Eastern Market Indicator (EMI) at 1002¢is just back over the 1000¢mark in US currency. There have been reports of increased demand from spinners in Europe, but that they are asking for very short delivery times.

In other countries, the Cape Wools Indicator in South Africa was up by 8.3% in Rand and by 4.3% in US currency since last week. The Wool Services International Indicator for fine crossbred fleece was quoted as up to 5% dearer; and coarse crossbred fleece as firm to 2.5% dearer in New Zealand.

Among other fibres, cotton Futures up to July next year all fell slightly during the week. December Futures were 71.36¢on Friday, down by 0.2% since the previous week

37,118 bales were on offer, compared with 43,271 bales last week. 3.6% were passed in, comprised of 1.7% in Newcastle, 3.9% in Melbourne and 6.1% in Fremantle. Pass-in rates for Merino fleece and skirtings were 3.5% and 1.6%, respectively.

35,780 bales were cleared to the trade. The year-to-date offering is 68,333 bales less (-12.7%) than at the end of the same week last year.

This difference is expected to become less over the next three sales, each of which is expected to be larger than the corresponding sale last year. If the expected offerings are achieved, the year-on-year difference will be between minus 7% and minus 8% in at the end of the period.

Next week’s expected offering of 51,861 bales sale is the largest for the season to date. The US exchange rate fell sharply early in the week before lifting on Tuesday and again on Thursday. Financial analysts attributed the fall on Monday more to the strength of the US$, arising from strong US jobs data, than to a weakness in the A$.

Tuesday’s rise was mostly attributed to a strong Chinese share market following the holiday break. The increase in Australian jobs in Thursday’s job data was considered to be the main reason for Thursday’s rise.

Skirtings continued to be in very strong demand. AWEX reported gains of up to 40¢greasy in Newcastle on Tuesday. This was followed by rises in all centres on Wednesday and Thursday. Crossbreds had another good week, with good gains from 28 to 32 microns. All oddments also had a good week. The average Merino Cardings Price Guide was up by 2.4%.

Buyers from China were dominant this week, followed by strong support from buyers for Europe and India. Buyers for Italy were very strong in Newcastle.

Sales will be held in Sydney, Melbourne and Fremantle next week, when 51,861 bales are currently rostered for sale. Present estimates for the following two sales (Weeks 17 and 18) are 39,920 and 46,500 bales, respectively; an increase of 15.8% over the three sale period when compared with last year. The New Zealand Merino Company is rostered to offer 2,000 bales in Melbourne next week and 2,000 bales in Week 18.