Price variations on all types apart from carding wools were minimal with just 5 or 10ac movements either side of the established values at Australian Wool auctions this week. The strengthening Australian dollar (AUD) against the US dollar (USD) was the most influential price determination factor. The declining quality of wools available also played a role. The Australian Wool Exchange (AWEX) Eastern Market Indicator (EMI) fell 16ac or 0.81 per cent to 1963ac clean/ kg for sale week 38 ending March 22, 2019. Conversely though, in USD terms, the EMI increased by 6usc or 0.40 per cent to close at 1403usc clean/kg, as AUD strengthened 1.22 per cent against USD recently.
However, the quality of the freshly shorn Australian wool clip is unfortunately declining. “The relentless and on-going drought across a large part of the nation continues to negatively impact upon wool quality. Large proportions of the New South Wales and South Australian clips are all influenced negatively to some degree. This predominantly effects yields,” the Australian Wool Innovation Limited (AWI) said in its ‘Wool Market’ weekly report.
“Many drought affected clips are now registering average dry yields of less than 60 per cent and in some cases, less than 50 per cent. Low yields and dust penetration become an issue in scouring as water replacement frequency increases and sludge disposal costs escalates,” the AWI report said. All merino fleece types of good to better test readings were largely unchanged to slightly dearer for the week. Following a strong opening day which saw these wools gain upward of 15ac/kg, the stronger AUD on the final day resulted in prices softening towards the opening levels. What brought down the overall market though was the 40ac falls on the lower specification sale lots.
Merino skirtings tracked to a similar path as their fleece counterparts, but the lower edge of these descriptions were poorly neglected to be 80ac cheaper, albeit in a very minor section of the offering.
Comebacks and crossbreds (26 to 32micron) continued under strong enquiry and appreciated in the general range of 5 to 25ac. Cardings were the low performers of the series and many types lost upwards of 70ac. Current auction volumes have been supported by many growers having to shear and sell their sheep due to the rising and ongoing costs of maintaining their animals in drought areas. Failure of any significant rains to encourage pasture growth or any positive forecasts prior to winter has led to this. Most brokers are reporting a precipice in offered wool is fast approaching.
Meanwhile, the South African sales sold to a vastly better tone this week and the local values showed a 0.9 per cent increase overall on the Cape Wools Indicator. Assistance was provided by a weaker foreign exchange rate which ultimately saw prices weaker in US dollar equivalents. Strong buying activity from Chinese interests re-emerged to reinvigorate the market with some sense of stability. Nearly 39,000 bales would be on offer at next week’s sales. “Encouraging signs emerged this week across most of the better type sections indicating the possibility of consolidation is not that far off,” the report said.