Positive Sentiment at Australian Wool Auctions as Buying Pressure Increases
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- Published: Friday, 31 May 2024 16:43
This week's Australian wool auctions have seen a noticeable shift in sentiment, with increased buying pressure across all wool types on offer. Major local traders have reasserted their dominance on the purchasing lists, and all buying sectors were active, creating a more buoyant atmosphere in the sale rooms compared to the past month.
Improved foreign exchange (forex) rates have contributed to better price returns for growers, while lower volumes on offer have influenced manufacturers' decision-making. The next three weeks are expected to see average weekly sales drop to less than 30,000 bales. The Western Australian wool selling centre in Fremantle will not offer wool in week 49 and will also sit out week 51 due to insufficient volumes to hold a commercial sale, according to the Australian Wool Innovation (AWI) in its commentary for week 48 of the current wool marketing season.
The diversity of Merino wool types on offer is notable, with many clips in the 18.5 to 21-micron range containing higher vegetable matter (VM) levels of 2.5 per cent to over 5 per cent. This allows top makers and traders to seek value by trading away from mainstream types. These higher VM clips are currently finding strong support, as the VM within the fleeces is relatively easy to comb.
This trend is reducing the percentage of weekly supply of 0.1 per cent to 2 per cent VM sale lots, placing upward price pressure on these lower VM clips. Standard contracts from China still require VM levels to average 1 per cent for fleece types, and main volume customers from India have similar specifications for completed orders.
Within the Merino fleece sector, general price gains ranged from 10 to 20 cents per kilogram clean. Notably, premiums were observed for better-specified and more stylish superfine (less than 19 microns) sale lots, which are traditionally suited to the European market. These few lots offered this week sold at approximately 140 cents per kilogram clean above the standard types, the AWI commentary added.
Next week's auctions will see around 27,500 bales up for sale on Tuesday and Wednesday, but only in the eastern selling centres of Sydney and Melbourne, with Fremantle not participating. This development highlights a strategic adjustment in the market, focusing activity on regions with sufficient volume to sustain commercial sales.