Some very mixed results were posted at this week’s Australian wool auctions. The Merino sector of 18.5 micron and finer experienced some heavy price falls whilst some good gains were registered on the 19 micron and broader wools. Crossbred wool types sold mostly to the buyers favour and carding types of all description were to the seller’s favour.

The declining Australian dollar against US and Euro currencies this week assisted in preventing larger price falls for growers paid in AUD. 

Some wool types finer than 16 micron were up to 400ac clean lower as buyers overlooked this area at the previous price levels, albeit in small offerings. Hogget and weaner types were mostly affected, but even the better types were 150ac lower as buyers readjusted their valuations. These wools are used to produce high end items that are relatively hard to sell at the moment, so cautious pricing for largely stock inventory is the modus operandi.

The apparent absence of activity or price-sensitive actions from some important European interests saw the 16 to 18.5 micron volume area also lose considerable value to see over 120ac wiped off values. Many best top making types of 1.5%  to 2.5% vegetable matter (vm) were the main lots heavily discounted. Spinners types were also lowered to similar degrees as the lack of competition at the top of the market went largely to one buyer’s advantage. 

On a more positive note, the 19 micron and broader Merino wools which are considered more of the volume and commodity types, headed to dearer levels as China mainly pushed to buy in the relatively limited offerings. The Fremantle centre highlighted this and sold to dearer AUD levels throughout the selling week. In fact, the Western Market Indicator (WMI) bucked the Eastern centres trend and saw the entire WA market 12ac higher on average for the week.

The volume of off-shore buying is failing to match the current auction offerings and this is exacerbated by the return of South Africa as a greasy competitor able to ship to China once again. Global traders are adjusting their books and strategy back to these normal conditions and once settled, we should have better access to clearer market signals of demand.  In Australia, we have sold 41,487 more bales this season after just seven weeks of selling than at the same time last year, an 18.6% year on year increase.

Local traders were the main buyers but their purchasing had no sense of urgency. As prices lowered significantly at the finer end, Chinese and Indian users increased their interest and buying, taking advantage of the holes in the market created by the lacklustre European buying. Perhaps the higher VM levels that many of these better style and specifications sale lots are carrying is preventing the usual activity from the Europeans. 

Next week’s auctions are Tuesday/Wednesday with 37,600 Australian bales.