AWEX wool indicator finishes 4.3% lower last week

Australian Wool Industries Secretariat Inc (AWIS) releases wool sales report for week ending November 9. The Australian Wool Exchange (AWEX) Regional Indicators finished 4.3% lower, on average, at sales in Sydney, Melbourne and Fremantle this week when the US exchange rate rose by 0.4%.

The six week run of wool price rises that took the Eastern Market Indicator (EMI) from 940¢ to 1048¢ two weeks ago came to a sudden halt this week when the Eastern Market Indicator (EMI) came back by 41¢ in Australian currency and by 41¢ in US currency.  The sudden rise in the market had been a surprise to many in the trade; and there was uncertainty as to whether the factors driving the increase were short term or longer term.

The Eastern Market Indicator (EMI) fell by 2.2% on Wednesday.  This was followed by a greater fall in the South African Market Indicator on Wednesday night and a fall of a further 2.1% in the Eastern Market Indicator (EMI) on Thursday.

There were falls across all micron ranges and wool types on both days.  The only exceptions were among the oddments where some types were quoted as firm or unchanged.  Merino wools were more affected than crossbreds.

Sellers reacted by passing in a greater proportion of the offering, particularly on Thursday when the Pass-In rate was 28.5% in Melbourne and 36.2% in Fremantle.  Presumably, some of the passed-in wool was wool that had come onto the market in response to the recent upward movement in the market.

Despite this week’s fall, the Eastern Market Indicator (EMI) is 63¢ above where it was in mid-September.  But, the fall has increased the difference between the current market and last year’s prices.  The Eastern Market Indicator (EMI) is now 216¢ (-17.7%) less than in the same week last year and is 67¢ (-6.3%) less than at the start of the season.  The WMI is 217¢ (-17.6%) less than in the same week last year and is 63¢ (-5.9%) less than at the start of the season.

In other countries, South African sales, the Cape Wools Indicator was down by 3.9% in Rand and by 3.5% in US currency since last week.  In New Zealand, Wool Services International quoted fine crossbred fleece as “generally firm” and coarse crossbred fleece as “generally in buyers’ favour”.

Among other fibres, cotton Futures eased again during the week.  December Futures closed at 69.58 US¢ on Friday, down by 1.1% since the previous week.

48,031 bales were on offer, compared with 51,336 bales last week.  22.4% were passed in, comprised of 16.4% in Sydney, 21.6% in Melbourne and 30.9% in Fremantle.  Pass-in rates for Merino fleece and skirtings were 27.4% and 25.4%, respectively.  37,257 bales were cleared to the trade.

The year-to-date offering is is now 40,864 bales less (-5.8%) than at the end of the same week last year, as wool has come onto the market in response to the recent increases in price.  The expected offering of 58,200 bales for the coming sale is the largest so far this season.  It may not reach that level if this week’s falls lead to an increase in the number of bales withdrawn prior to sale.

The main movement in the US exchange rate this week was an increase of 0.66¢ on Tuesday following the Reserve Bank’s decision to leave the official Cash Rate unchanged at 3.25%.  There was a small short-lived downward movement on Wednesday in response to the economic concerns in the United States following President Obama’s re-election.

Skirtings very strong surge of recent weeks ended sharply this week, in line with the downward movement in prices for Merino fleece types.   The Pass-In rate moved up from 5.6% last week to 36.5% on Thursday and averaged25.4% for the week.  As mentioned on the previous page, crossbred wool suffered less than the Merino wool.  The only exception was at 32 microns, where the average AWEX Micron Price Guide (MPG) was down by 5.2%.  Oddments were mixed but were generally the best performers for the week.

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 58,224 bales are currently rostered for sale.  Present estimates for the following two sales (Weeks 21 and 22) are 50,520 and 54,400 bales, respectively; an increase of 22.7% over the three sale period when compared with last year.