By Robert Herrmann | Source: AWEX, ACA
This was a week of “toing & froing”; in early sales buyers tested the market to see if some of the gains from last week could be taken back. However, by the end of the week, buyers were forced to re-engage to secure volume.
A small catalogue of Merino fleece wool (AWEX reported the smallest Merino fleece offering since March 2016), and growers preparedness to pass-in around 8% of the offering eventually forced the hand of buyers.
Of the 42,500 bales originally offered, only 39,201 sold. The Pass-in rate was 7.8% or 3,318 bales.
The A$ was quoted up for the week to sit above US$0.79 at the close of selling. This contributed to the Eastern Market Indicator (EMI) falling by $0.06 for the week to close at 1812¢. After last week’s massive 102cents lift, The Western Market Indicator (WMI) gave back 42 cents to finish at 1879 cents.
The underlying strength in the market was evidenced by the EMI rising US$0.14 for the week due to currency movements.
Again, we have seen evidence that by passing-in lots, sellers are able to exert influence in the market to support wool prices when the market softens. Buyers have little option but to bid the market up to fill orders as there are scarce supplies of wool floating around the system.
In general, Cardings and Crossbred types had a good week, posting gains in all centres except for W.A., although in the West any types finer than 17 microns experienced “extreme” demand with up to 100 cent increases.
Growers need to take care with “off-type” wool; lines with low staple strength, high mid-breaks or excessive VM levels are the most effected in the current market. When the market rallies and buyers are scrambling to fill orders, faults are over-looked and prices for lesser quality wools are excellent.
However, when the market eases, these types are the most effected. Conversely, wool exhibiting good measurement holds value in an easing market due to the shortage of these types to fill existing orders.
Sales are scheduled for all three centres next week, with Melbourne selling on Tuesday, Wednesday & Thursday while Sydney & Fremantle will only offer on Wed & Thur.
A total of 41,815 bales is rostered, only 1,000 bales less than this week’s offering but more than the clearance of 39,000.
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