Weekly Wool Market Commentary

Week S13: The AWEX EMI closed on 1255c - down 24c at auction sales in Australia this week.

This week’s poor result signals the 5th week of price falls in the EMI which now totals 133c or 9.5% and equally as alarming, it is the 11th week without the EMI showing a price increase.

The 1.99c fall in the value of the AUD to .647c against a strengthening USD may have masked the real market sentiment in the lack lustre merino fleece market.

The EMI fell 41c in USD terms closing on 812 USc - the lowest for almost 2 years and reflecting the growing number of economic headwinds faced by governments, business and consumers. The previous week’s public holidays limited the national weekly offering to 28,144 bales, the smallest offering this season.

Despite the low offering, the market could only manage an 84% clearance rate with Melbourne passing in 20.6% of their fleece and Fremantle passing in 27.2% of their fleece.

Merino Fleece came under extreme price pressure when the market opened on Wednesday as the large Chinese processors dominated the purchasing at a reduced price basis. The EMI fell 20c on Wednesday driven by the fleece category with the worst of the falls experienced in Melbourne and Fremantle whilst Sydney’s slightly better style offering restricted the fall in their NMI to 9c.

At the close of Wednesday, the Merino MPG’s in Melbourne were 50-78 cheaper whilst Sydney was able to restrict the MPG falls to 20c. Thursday’s sale saw the falls moderate with both the NMI and the SMI falling 4c whilst Fremantle added 2c. The new level brought in some trading in the forward contracts for 19µ initially at 1550c before some trades at 1500c eventuated, 3% below the cash price.

Merino Skirtings were far less affected on Wednesday than their fleece counterparts, to the point as the lower style & spec fleece lots are priced around the same or slightly less than the skirtings. Thursday’s market saw skirtings come under some noticeable price pressure on the finer types. Support from the Australian based exporters added some much needed competition to the large Chinese processors. Crossbreds continued to be irregular and with the smaller offering this week, there was little or no change in the main crossbred market indices. Buyers continue to be selective in this category as reports of demand have not improved.

Merino Cardings have had a number of weeks defying the general market trend which continued this week. Good demand was evident for merino lambs and locks which resulted in slight price rises whilst prices for stains and crutchings held firm. Crossbred Oddments remain irregular however selected lots at times were able to attract spirited bidding.

Despite the weak start to the 2022/23 season which has fallen victim to the poor demand and increasing logistic and manufacturing costs, there has been $555million of wool sold at auction, an increase of $55m when compared to the corresponding sale of the 2021/22 season aided by an additional 39,261 bales offered this season. Coupled with this offering increase, wool production forecasting has signalled projected production increases from 324 mkg to 340 mkg - up 4.9%. The volume may further challenge the market in the current environment.

Next week, Australia will offer 40,097 bales in Sydney, Melbourne and Fremantle. Selling will remain on Wednesday/Thursday due to a Monday Public Holiday in Sydney. Everyone will be watching to see if the runaway downward trend will find its price low point next week or if we have a few more weeks of pain to endure.

- Marty Moses

• Topics:

• Agriculture
• Wool
• Farming