Continuation of the smallish offerings and more advantageous foreign exchange rates were the primary factors affecting sale results at this week’s Australian wool auctions.  Almost all Merino types and descriptions edged 10 to 15  higher in Australian dollar (AUD) terms. US dollar (USD)  values also headed into positive territory, albeit by the barest of margins.

The more favourable foreign exchange rates caused by the weakening AUD, accounted for the majority of the spot price improvements. Most currency rates dropped AUD converted values by around 0.6%, with the CNY and USD creating the most opportunities to assist local auction price gains.

The past few sale weeks has seen this currency led cheapening for overseas users extract some new business. Volumes being purchased will need to improve markedly if manufacturers are to hit peak garment production in time for the upcoming Northern Hemisphere winter/fall retail selling period. This particularly applies to European based processors whom are faced with ever increasing lag times for delivery and of course the significant increases in costs associated with that extra sailing time.

Weekly volumes being offered are well below that usually seen at this time of the selling year. Part of that issue is the forecast decline in production. Dry times have affected the past 8 to 12 months of wool growing across many regions, but mid-August did see some welcome wet weather in those same areas and has delayed shearing to a minor extent. Quantities being auctioned are also down due to some sellers not accepting current price levels and choosing an alternative wait and watch strategy.

The large first stage processors remain at and near the top of the buying lists. Additional competition did appear though from Australia’s largest export trading company whom were stronger in their auction actions than seen for a few weeks now. That activity inevitably brings confidence to others through the sale rooms, resulting in an auction atmosphere somewhat more buoyant than the previous month or two, even though price advances were rather modest. 

Next week sees 30,000 Australian stored bales rostered to be auctioned over two days in Eastern markets, but only one day is required to sell in WA .