May 9, 2017
Australian merino wool prices rise as demand increases
May 9, 2017
Extraordinarily strong price rises in the merino sector featured at Australian wool auctions during the week ending May 5, mainly due to demand outstripping supply. Gains of between 3 to 5 per cent were recorded across the 17 to 22 micron area as 3 or 4 of the major buyers exerted extreme purchasing pressure in the suddenly reduced offerings.
“The 38,000 bales on offer appeared to be short of what the trade demand currently requires, hence the upward spiralling price movements,” the Australian Wool Innovation said in its ‘Wool Market’ report for the sale week 44.
The AWEX Eastern Market Indicator (EMI) concluded the week at 1544ac/clean kg, a hefty rise of 43ac/clean kg, almost a 3 per cent gain. When measured in US dollars the move was somewhat diluted as the foreign exchange rates went over 1 per cent in favour of those buying in US dollars. The USD EMI still managed a 20usc gain to 1144usc clean/kg.
The market talk centred around opinions that manufacturers are still struggling to satisfy their demand needs, particularly those using Merino types in their production. Many in the industry believe that the merino wool price at present reflects a restocking of the supply chain and is likely to continue until all users are set. On the other hand the comparatively lower price on the crossbred sector is indicative of stocks held and a reasonably full chain from greasy through to yarn, although this is reportedly being depleted.
Traders reported strong purchasing interest from both India and China, but many local exporters were extremely reticent to go short and take on some of the reasonable prices being offered. Much of the prompt shipment needs was therefore transferred to indent operators where possible and arrangements with Australian buyers were in place.
On the other side, local buyers pushed to buy early to add to any existing stocks of greasy wool, knowing that advantageous sales were available once containers were bought and available to sell.
During the week, a very limited supply of the superfine and ultra fine merino sectors (wools finer than 18.6 micron) was again on offer and the traditional European buyer was again dominant on all the good wools available. Other trader exporters for Europe were rather subdued as buying activity from those operators was appearing limited, indicating demand has been met for immediate shipments to those zones as they head closer towards their summer holiday and slow down.
Meanwhile, the South African wool market is close to the end of their wool selling season. As they have a two-month sojourn, some of the demand traditionally for that market will swing to Australia to fill any shortfalls in raw material required, the report said.
All crossbred and carding types were sold under an extremely stable environment again and prices could be described as being firm to unchanged throughout, but cheaper in USD terms.
This week too, there are less than 40,000 bales on offer between the three selling centres at the Australian auction sales. In fact, the next three weeks has no sale week above the 40,000 bale mark.
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