Erratic price behaviour featured this week at the Australian wool auctions. The week’s daily price movements on Merino fleece wools acted in complete juxtaposition to last week by being significantly dearer on the first day and then significantly cheaper on the final day. Despite this volatility, values by the close of selling finished within 10ac above or below the established levels. All other wool types on offer traded barely firm then trended downward to be 5 to 15ac cheaper, with crossbred wools the main casualty.

The Eastern Market Indicator (EMI) finished the week at 1369 ac/clean kg, a fall of  0.4%.  In USD terms the EMI went the other way to be 8usc higher at 1037 usc/clean kg  which was a forex forced increase.  The Fremantle selling centre produced the best results. 3ac was added to the Western Market Indicator (WMI) to move positively to 1421 ac/clean kg. Nationally, just 86.1% of all wool eventually offered flowed to the trade on top of the 6%  withdrawn by growers prior to sale.

The bullish commencement to the selling week came about due to uncertainty surrounding the potential consequences of a foot and mouth outbreak in South Africa (RSA). The temporary break of supply from that nation led to some purchasing pressure transfer to Australia. The RSA industry decided to eliminate risk for the time being by postponing their auction sales for this week. Robust biosecurity protocols and risk mitigating measures in that country should enable a quick return to normal trade. 

Foreign exchange rates were the primary factor that depressed wool prices on the final day of selling. The Australian dollar strengthened remarkably swiftly. The Euro in particular moved almost 4% lower from the end of last week. The AUD is at the strongest level against the Euro since April 2017, highlighting the economic impacts being felt in Europe by the Ukraine conflict. This forced the cost of wool for those buying in Euro 3.3% higher. In contrast, the AUD was at today’s equivalent rates against the USD and CNY just 10 months ago.

Next week’s Australian auctions will be operating over two days of Tuesday and Wednesday. Currently just over 48,000 bales is available to the trade.