Mixed results at the Australian wool auctions this week, with the two days of selling producing opposing fortunes. The week started poorly with general losses of 20 to 30ac followed by a recovering last day whereby half of the losses in value were placed back onto most wool types. Perhaps the single most noticeable factor for the week was the continued growth of participation at auction by European interests.

The Eastern Market Indicator (EMI) fell 0.7% or 9ac for the week to close at 1352ac clean/kg. The Western Market Indicator (WMI) performed better than the East and actually posted a 3ac gain to 1392ac clean/kg.   A cheapening Aussie dollar (AUD) against all major currencies helped stymie larger falls in AUD but overseas users gained a 1.5% windfall as the USD EMI fell 15usc to finish the weeks activity at 990usc clean/kg. 

Despite the loss in value that occurred on the first day of trade, wool grower sellers largely accepted prices being offered. A reasonably strong national clearance rate of 87.2% was achieved. Crossbreds and cardings were hard to sell in Sydney, as 20% of those wools failed to meet reserve whilst the Melbourne market saw Merino fleece passed in rates (13.6%) higher than the sale average(12%). Fremantle saw 84.8% of their Merino fleece sold.    

Once again European interest caused major re-thinks in strategy and auction price averaging for their competing buying interests. Euro orders are taking a fairly high percentage of the better specified lots and mainly FNF (less than 1%vm) sale lots. This causes the buyers for Chinese and Indian customers to have to adjust premiums and discounts for most tested parameters to hit the minimum specifications required at the ideal price points. 

The yo-yo effect on market prices we are seeing presently is a direct result of that extra competition and the ongoing pricing adjustments being made. This is coupled with the strengthening and recovering demand for raw wool from outside of China and a weaker demand scenario arising currently from within China. Indian buying remains interested but subdued in volume, with a concentration towards a cheaper raw input  product.

Around 37,000 bales is roster to be offered at all three centres next week.