Smallest offering in 25 years sparks buyer interest

Wool market experiences humble rise as small offering sparks buyer interest

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Australian wool market experiences lowest national quantity in 25 years.

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Australia's wool market saw its lowest offering in 25 years.

Australia's wool market saw its lowest offering in 25 years.

In what was the lowest national offering for 25 years, the Australian wool market rose for the second week in a row with the AWEX Eastern Market Indicator (EMI) adding 13 cents, closing at 1183 cents per kilogram for the week.

And although this only equated to a humble 1.1 per cent increase, it was welcome news to sellers as buyers interest lifted with orders needing to be filled.

The national offering was just 15,375 bales, 3453 fewer than last week and and the lowest national quantity since AWEX records began in 1995.

Only Melbourne and Sydney sale centres operated this week with no Fremantle sale.

Most individual microns recorded price rises of two to 30 cents, with the exception of 16.5, 18 and 21 microns in the south sale recording little change.

The limited offering of Merino skirtings, crossbred and oddment attracted strong demand, pushing prices higher, generally between 20 and 30 cents.

The crossbreds also enjoyed rises this week with 26 to 28 microns rising by 12 to 41 cents.

But industry experts warn the rise is not to be seen anything but for what it is - a reaction to the low supply.

Craig Lawson, Southern NSW Wool Manager, Nutrien Ag Solutions, said the rise in the EMI over the last two weeks has been due to a squeeze on to fill orders as well as the market following conventional economic ideology - the reduced supply attracting stronger demand.

"Buyers have orders that they have to complete so they can get them delivered to China," Mr Lawson said.

"The quantities that are being offered are expected to remain low until the end of June. One of those reasons is a number of growers have been advised by their accountant to not sell until the next financial year."

He anticipates a spike in amount of wool placed onto the market during the first two sales in July, before the annual three week recess, which will put pressure on the market to sustain the level it's at right now.

"We are only getting a limited rise on very small offerings, once we get a bit more quantity coming in, it will put stress on the market to hold its levels," Mr Lawson said.

We are only getting a limited rise on very small offerings, once we get a bit more quantity coming in, it will put stress on the market to hold its levels - Craig Lawson, Southern NSW Wool Manager, Nutrien Ag Solutions

"I really don't believe there will be a significant rise in the wool market for 12 months.

"We still can't physically deliver wool to a major part of the world because countries are still in semi or full lockdown."

He said Italian mills are operating at a 30pc capacity and mills in India are operating at 20pc capacity.

"That will all change in time, but they are not going to go back to 100pc in a week or two," he said.

"It will take time - the longer it takes, the longer it is going to keep the pressure on markets to not rise.

"The other telling reason is we are not selling a product out the other end at the moment because no one has been able to go out and buy the product. It is a snowballing effect."

Worth noting, due to the strengthening of the Australian dollar, the price increases when viewed in USD terms were more significant.

The EMI rose by 44 USc for the series, closing the week at 821 USc, this was a rise of 5.3pc.

Sales resume at all three centres next week, with quantities increasing to 24,140 bales currently lotted for sale with Fremantle rejoining the selling program.

The story Smallest offering in 25 years sparks buyer interest first appeared on Farm Online.

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