Significant correction in wool market

Wool market takes a slide in opening wool calendar week


Sheep
The wool market dropped below 2000 cents a kilogram this week, albeit still at an acceptable level according to wool specialists.

The wool market dropped below 2000 cents a kilogram this week, albeit still at an acceptable level according to wool specialists.

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Wool market closes 62 cents lower at 1994 cents per kilogram, clean.

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Week one of the wool selling roster for 2018-2019 saw the largest weekly fall in the Australian Wool Exchange (AWEX) eastern market indicator (EMI) since August 2012 when it dipped 62 cents from the previous week to close at 1994c per kilogram, clean. 

Traditionally one of the larger sales on the roster, as producers who held over their wool for tax purposes enter the market, week one resulted in a significant correction with prices falling from 50 to 90 cents, with some off-style types 120c cheaper.

Corrections in prices were seen across the all Merino types and it was those wools with poor additional measurement results and those carrying excessive vegetable matter that were most affected. 

Fleece lines finer than 18.5-micron were least troubled in the price dip. 

Landmark south-east wool manager, Stephen Keys, said a couple of factors surrounded the correction.

“There was a lot of low yielding wools in the offering coming out of drought affected areas which has an impact on the market,” Mr Keys said. 

“Over the last few weeks there has been a push for certain types with people after Merino and crossbred wool to fill orders.

“A lot of these larger orders have been filled so this week they seemed to be picking and choosing and bought wools that they wanted to take into stock.”

As predicted, the wool held over was notable, alas 14 per cent lower than the same time last year, with wool older than 180 days representing just over a third of the national offering and nearly 57 per cent of the western region offering.

In total 43,880 bales were offered with 15.6 per cent passed in, an increase of 9.5pc from the previous sale. According to AWEX reports this was due to sellers being reluctant to accept the reduction in prices. 

Mr Keys said three weeks ago the trade didn’t expect the big rise in the market and and this week it didn’t expect a  fall of this level. 

“Only two weeks ago we saw most Merino fleece types rise by 70 to 80 cents, which was unpredicted. We have lost that this week, so we are back to where we were, which is still a very acceptable level,” he said. 

He anticipates next week, the last sale before the recess, should be a little easier for most types. 

“Historically exporters like to go into a break on a fairly buoyant level so they can do some trading during the break,” he said. 

“It may not have the dramatic decrease that it has this week.” 

But according to Mr Keys the underlying trend and demand for wool is still strong.

“Coming in towards the spring we should still see a very buoyant market,” he said.

“The capacity for processing overseas still needs to be met. That will be one of the key drivers for the market remaining at a high level.” 

Senior Market Analyst of AWEX, Lionel Plunkett said there could be a pent up supply that builds up in the pipeline during the three recess weeks which could result in larger sales for the first couple of weeks in August. 

“You tend to get a reasonably big sale on that first week back after recess,” Mr Plunkett said.

“The longer the recess the greater the scope for that build up of supply in the system.

“That’s released quickly in the first couple of weeks and then it tends to die down before it starts to build up through mid to late spring.” 

The Australian wool auctions will recess from the week beginning July 16, returning in the first week of August.

The story Significant correction in wool market first appeared on Farm Online.

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