The positive signals that emerged at the end of last week flowed through strongly to this week’s selling at the Australian wool auction markets. Price improvement was predominantly across all Merino types and gains of up to 45ac clean/ g were posted for the sale week.. The crossbred section was erratic but also showed signs of an upward correction as levels recently lowered to those not seen for a few years. The Eastern Market Indicator (EMI) advanced by 24ac clean/ g to conclude the wee almost 2% higher at 1314ac clean/kg.

Helping out the ascendency in our local mar et was the foreign ex-change (forex) rate of the AUD and USD . The forex went significantly in favour of local sellers over the past 7 days, falling 2.4% from 76.61 to 74.78. It was a week that produced generally good results for all end use and first hand participants. The EMI when expressed in USD terms actually fell 5usc clean/kg to 983usc clean/kg, so the overseas buyers using USD practically felt no effect in placing new orders, but the growers added almost 2% to their sale account returns. Obviously individual types vary more, but this gives the general pricing trend.

Whilst the auction volumes have been relatively large over the past few weeks, a significant portion of that growing wool supply has been in the crossbred sector, and Merino types remain in a relatively short supply. It is a widely held belief amongst the trade that stocks of Merino wool in general are close to zero globally and these types will react instantly and more radically to any additional noteworthy orders being placed into the Australian market.

Continuing dry weather has allowed growers to catch up with shearing and trucks are able to move wool into store. As a result of the delays, some longer staple length (gsl) wools have been on the mar et and are expected to remain available until Christmas at least. It is interesting to note the relatively small discounts (if any), that are currently being applied to these lots. This must please those wool growers who through no fault of their own have these wools for sale. Given the amount of rain that has occurred, it is unavoidable that an increase in unscourable colour would appear, but at this stage, no radically affected clips have been witnessed. Good attempts at placing any affected wools into cast lines is being actively encouraged and evidenced.

The first day of sales was a standalone Melbourne auction sale and prices lifted by just a few cents in the Merino fleece offering. Buyers were obviously not wanting to spook the mar et too much on the smallest offering for the week . To this effect that means they were less aggressive as they would have liked as they would have contributed to pushing prices higher against their own position without accumulating the quantity needed on the way up.

The Wednesday sales saw Sydney and Fremantle join the auction selling and quickly the sale results brought about the inevitable. All buyers pushed from the outset to purchase weight and 10 to 15ac clean/kg price gains were achieved. Unlike the previous few weeks where purchasing had been dominated by a large Chinese indent, the major com-petition came from the 3 largest trading exporters with very good sup-port from the largest Chinese top makers.
Overnight on Wednesday and into Thursday, the sale results from the South African auction day of 14,000 bales flowed through to Australia. An extraordinary daily gain of 6.7% had been posted in that market with a staggering 11.3% gain being reported on 20 micron wool, albeit with a 5% currency advantage gained on the Rand v USD. Obviously this affected the Australian mar et positively and Thursday brought about further rises of 10 to 25ac clean/kg, making most of the Merino sector 20 micron and finer 35 to 45ac clean g dearer for the week , with 20.5 and broader 15 to 20ac clean/kg dearer.

The merino skirtings and cardings sectors also experienced a strong uplift in demand and as such so did their price levels. General gains in both of these market segments of between 20 and 40ac clean/kg were achieved and once again limited quantities of any one single type contributed greatly to the competition.

The signs of a halt to the slide that appeared last week on all crossbred types(26 to 30 micron) initially appeared erroneous as they commenced the wee to their cheapening trend. Tuesday and Wednesday saw a further 5 to 20ac clean/ g eliminated from their values, but by Thursday, the traders from both here and in China stepped bac into the mar et and for types broader than 28.5 actually ended up 5 to 15ac clean g dearer for the week . At the finer end in the comeback area (24 to 27 micron) losses of 15 to 25ac clean/ g were recorded.

49,000 bales is rostered to sell at all three Australian auction centres next week . A continuation of the strong demand will ensure this quantity will be no impediment to the price levels remaining on the bullish side. A significantly stronger AUD may place a dampening affect onto prices but confidence in purchasing Merino types remain strong and the initial movement of the AUD since sales closed has been to a very much weaker AUD. Hopefully crossbreds can continue to be better sourced and establish a dearer trend for growers of those types.

Industry - Wool Exchange Portal Announcement

After an exhaustive two-phase, two-year program of consultation, review and discussion of the wool selling system, the Wool Ex-change Portal Working Group (WEP-WG) reported to the AWI Annual General Meeting via its Chairman Will Wilson. The group had been asked to provide the Board of Australian Wool Innovation (AWI) with a clear yes or no decision on whether to pursue the establishment of a Wool Exchange Portal.

The WEP-WG voted unanimously to support the development of a Wool Exchange Portal at its final meeting. Subsequently, the AWI Board thanked the Chairman of the WEP-WG for its exploration of the subject and has asked Mr Wilson to return to the AWI Board in April 2017 a costing, timing and business case model for funding approval of a Wool Exchange Portal.

The WEP-WG in the next phase will be engaging a number of different parties and industry groups and will require specialist s ill sets and expertise in the area of digital exchange platform construction.