Large price gains featured at this week’s Australian wool auctions as intense sale room competition created an overwhelming atmosphere of confidence. This converted into additions in value on almost every type and description on offer. Upwards of 100ac clean on some individual sale lots were achieved, but general rises of 50ac plus were recorded on Merino wools and just 10ac on crossbred wool as those types remain hard to sell.

The Eastern Market Indicator (EMI) appreciated rapidly throughout selling to close 3.5% or 46ac higher at 1369ac/clean kg. The AUD value against the USD also spiked upward by 2.2% which added further value to wool when expressed in USD.  A significant 5.7% or 56usc rise of the USD EMI to 1027usc clean/kg occurred. The Western Market Indicator (WMI) broke the 1400ac barrier in a 52ac price hike to a 1401ac clean/kg closing basis. 

The price gains were widely expected and those thoughts were transmitted throughout the trade pre-sale. Perhaps the Merino fleece spiking to initial 80ac gains took many by surprise, but almost all buyers remained active in the market despite the magnitude of those price gains. Towards the end of the first day’s selling there appeared to be a lull as buyers assessed the speed and extent of price rises. 

A price retraction and consolidation on the final day greeted buyers and that softening remained in play for most of selling. Towards the end of the auctions those price degradations were largely recovered and prices were almost back to the previous day’s closing levels as competition ramped up once more as buyers looked to cover off risk and exposure.

Demand out of China was largely responsible for this week’s activity. From the close of selling last week, exporters were fielding increasingly higher bids from that country. The volume of new business took most immediate stocks available and therefore forward exposure had to be considered to take on more quantity of forwards that were on offer. As exporters rejected bids the clients improved their bid levels trying to entice lock ins. A range of 35usc improvement was flagged and subsequent auction gains far exceeded.  

The Merino fleece and skirting were again the target market with the largest gains recorded on wools broader than 18micron. A general 80ac or 6% gains was made. The super fine types were by no means neglected but a lesser rise or around 1.5% or 35ac was made on types finer than 17.5micron. Crossbred wools produced a 5ac gain and cardings traded generally unchanged but had some very mixed results within the individual types. All purchasing sectors were active, with Chinese top makers and traders dominating as usual.    

Next week has 46,000 bales on offer on Tuesday and Wednesday.