The strengthening Australian dollar (AUD) played havoc with prices at the Australian wool auctions this week.  The AUD was substantially dearer against all the major currencies and the subsequent foreign exchange (forex) rates available had immediate and negative impacts upon the local auction price levels. General losses of 30 to 40ac/clean kg resulted on all types and descriptions. Important to note though, is that all prices expressed in those overseas currencies had appreciated in value week to week.

The Eastern Market Indicator (EMI) dropped by 1.7% or 24ac to close at a nominal basis of 1384 ac/clean kg, The EMI is quoted as nominal when an eastern centre sells without the other on any given day. The Western Market Indicator (WMI) dropped 22ac or 1.5% to 1424 ac/clean kg. In USD terms the EMI was 4ac dearer due entirely to the forex and reached a closing basis of 1034 usc/clean kg.

Passed in rates hit the highest rates for quite some time as just 83.9% of all wool offered nationally was ultimately cleared to the trade, confirming the trend that has appeared the past few weeks of growers holding onto their wool for a better price. The clearance rates did improve in WA though as a 20% passed in rate bettered the previous sale series. The Sydney crossbred wool sellers had a tough time again in achieving their price reserves which resulted in 32.8% of bales offered failing to meet expectations

Alongside the forex-induced downward pressure on prices, local traders had to finance more of the bales offered this week. The direct buying (and off shore sourced finance) top makers and indent operators dropped off in their purchasing rates. The auction direction was therefore largely in the hands of forward-trader sellers, who took the opportunity to lock in a profits. Competition for both selling overseas and buying locally was weaker than normal and new business was available if finance allowed.    

48,000 bales have been rostered to sell next week over three days. Pressure on the bank accounts of buying companies and exporters remain an important factor for price determination, just as logistics and forex rates also have a strong influence on the current market.