Price falls across the entire offering featured again at the commencement of this week’s Australian wool auctions, but a consolidation and some small gains during the final day’s selling provided a more positive finish. Bales withdrawn before selling commenced accounted for 15% of the original rostered quantities. Sale results subsequently had over 28% of wool eventually offered not meeting seller expectations. Therefore price and volume risk of 43% of the offering failed to transfer through to the exporters/buyers custody.

The Eastern Market Indicator (EMI) dropped 37ac or 2.7% for the week to close at 1335ac clean/kg.  All of the deterioration occurred on the first day of selling, with actually a gain of 3ac being recorded on the final days. The WMI (Western Market Indicator) fell 55ac lower  to 1351ac clean/kg with just a one day sale staged.  WA auction results saw a total of 57% passed in and over 67% of the Merino fleece failed to meet reserves.

Overseas users were again assisted by a weaker AUD as Australian share-markets followed the US markets down and iron ore prices continue to trend to the downside. In USD terms, the wool price falls were heavier at 4.1% or 41usc which had the USD EMI close at 969usc clean/kg. Both the CNY and Euro price equivalents suffered similar magnitude of losses.

Failure of substantive new business to emerge through the end of last week, over the weekend and early this week caused buyers to carry the already negative purchasing sentiment through to this week’s auction start. Some small volumes were conducted overnight Tuesday, albeit reportedly at low levels under the market, and this appeared to underpin the Wednesday selling program. Heavy grower withdrawals and high passed in percentages also prevented further price degradation for the moment. 

Some strong buying from Italy was a significant factor this week as one of the two companies of that nation hit near the top of national buyers lists. That company has now purchased 38.7% of what they purchased at auction for the entirety of last season after just 4 weeks of sales this season. The largest Australian trader exporter and China’s largest top maker lead the lists, with just subdued support from other traders, processors and indent operators. 

32,000 bales are currently rostered for next week. Only Sydney and Melbourne are selling as Fremantle will not conduct an auction.

The Australian Wool Production Forecasting Committee’s second forecast of shorn wool production in 2021/22 is 310 Mkg greasy, up 5.2% on 2020/21. Widespread rainfall throughout many key wool producing regions augurs well for a good spring season. Both the number of sheep shorn (up 3.3%) and average cut per head (up 1.8%) are expected to increase.