Weekly Wool Prices

Week Ending 22 June (Week 51)

25 June 2012

The AWEX Regional Indicators finished 1.4% higher, on average, at sales in Sydney and Melbourne this week when the US exchange rate rose by 2.1%.  The change in the EMI in US currency was 3.6%.

The market opened on the strongest note since the first week of May and prior to Greece’s inability to form a Government, when the EMI moved up by 2¢ on the first day of selling and by another 3¢ on the second day. There were small gains across all Merino micron ranges and types on Wednesday, particularly among the FNF wools. This was followed by further gains on Thursday when the greatest gains were recorded from 17 to 19 microns.

Crossbred wools were up also.

These gains were achieved despite a significant strengthening of the US exchange rate. It was one of the few times that the EMI has moved up in US currency this season.

Trade reports indicate that there was some good wool of offer this week, which attracted some strong competition.

The lift in the market had a buoyant effect on sellers, resulting in a fall in pass-in rates to less than half of last week’s levels.

One can never be sure of the reasons for a change in the market after one week. Factors that could have had some impact include the size and quality of the offering and the lift in global economic confidence up until Thursday (see below). It was the smallest sale of the season both nationally and in Melbourne; and South African sales are in recess until mid-August.

The weekly EMI continues to be below the same week last year (-367¢), while the season average still remain up on last year’s season average. The difference in the season average is now 64¢.

In other countries, the Wool Services International crossbred indicators in New Zealand were down by 2 to 4% at the fine end, firm in the middle and down by 5 to 6% at the coarse end.
Among other fibres, cotton December Futures rose early in the week, but were down by 2.7% to 69.12 US¢ on Friday.

Centre Last Sale Day-to-Day Changes (Week 51) Sale-to-Sale Change Closing Indicator Sale-to-Sale Changes
Week Indicator Tuesday Wednesday Thursday US ¢ Euro ¢
Eastern 501054No Sale+4+11+15 (1.4%)1069+38+22
Northern 501070No Sale+2+13+15 (1.4%)1085+38+23
Southern 501043No Sale+5+9+14 (+1.3%)1057+36+21
Western 501082No SaleNo SaleNo Sale


21,569 bales were on offer, compared with 32,693 bales last week (when all three regions sold). 6.1% were passed in, comprised of 5.3% in Sydney and 6.9% in Melbourne. Pass-in rates for Merino fleece and skirtings were 5.5% and 8.3%, respectively. 20,261 bales were cleared to the trade.

The year-to-date offering is 38,689 bales less (-2.0%) than at the end of the same week last year (see table below). It is unlikely to change at all with only one more sale this season.

The US exchange rate lifted sharply this wool selling week, remaining above 101¢ until Thursday night.  Financial analysts attribute this to a number of factors, including an improvement in global economic confidence, further expectations that Ben Bernanke will announce a third round of “quantitative easing” (printing money) this week and the success of the pro-austerity parties in Greece.

But, serious concerns still remain in the Eurozone; and the downgrading of the credit rating of 15 major banks by Moody’s on Thursday night (Australian time) had a major negative impact on economic confidence and the US exchange rate.

Exchange Rates
(Reserve Bank)
Last Sale Day-to-Day Changes Sale-to-Sale
Change
Closing Value Season Min & Max
Monday Tuesday Wednesday Thursday Min Max
United States 99.56+1.64+0.11+0.59+0.26+2.08 (+2.1%)101.6495.00110.55
Euro 79.18+0.40+0.77+0.03-0.23+0.97 (+1.2%)80.1571.5082.27


Sale-to-Sale Changes in Average AWEX Merino Micron Price Guides (MPGs)
Micron 16.5 17.0 17.5 18.0 18.5 19.0 19.5 20.0 21.0 22.0 23.0 24.0
Since Last Sale:
Change ¢ +4+22+29+28+24+31+23+16+8+5+7+10 
Change % +0.3%+1.6%+2.1%+2.1%+1.9%+2.5%+1.9%+1.3%+0.7%+0.4%+0.6% +0.9%
Since Start of the Season:
Change ¢ -1073-942-803-633-493-375-311-246-199-172-77+18 
Change % -40.6%-40.0%-36.8%-32.1%-27.6%-22.6%-19.9%-16.6%-13.9%-12.4%-6.1%+1.6 
Since Same Week Last Year:
Change ¢ -1044-958-836-716-536-445-394-351-292-248-139+10 
Change % -39.9%-40.4%-37.8%-34.9%-29.3%-25.7%-23.9%-22.1%-19.2%-17.0%-10.4% +0.9%


It was a good week for skirtings type also, with prices moving up on both days.  

Pass-in rates followed the downward trend of other types and at 8.3% were well below those of last week.

Crossbred wools were either too few in number to quote, or their prices moved up by similar amounts to those of medium Merino wools.

Oddments also had a better week after several weeks of mostly downward movements. The average AWEX Merino Cardings Indicator was virtually unchanged.

Sale-to-Sale Changes in Other Average AWEX Price Guides
Micron 25.0 26.0 28.0 30.0 32.0 MC#
Since Last Sale:
Change ¢    +5+9+9+1
Change %    +0.8%+1.6%+1.9%0.2%
Since Start of the Season:
Change ¢  +138+29 -53-27-71-213
Change % +15.4% +3.3% -7.8%-4.4%-12.6%-26.4%
Since Same Week Last Year:
Change ¢   -11 -77-55-97-244
Change %    -1.2%-10.9%-8.5%-16.4%-29.2%


# Average Merino Cardings Price Guide

Buyers for China were dominant this week, followed by strong support from buyers for Europe and India.

Highlights from the most recent Australian Bureau of Statistics export data for the top five export destinations and three other key destinations follow.

Country % Share of Australia’s Wool Exports by Weight of Wool Shipped Year-on-Year % Change in Wool Exports
April 2012 July - April This Season July - April Last Season
China 79.2%75.6%75.0%-10.7%
India 5.6%6.6%7.3%-20.2%
Italy 2.9%5.2%5.3%-13.3%
Czech Republic 5.9%4.0%3.9%-10.1%
Taiwan 1.9%2.3%2.4%-14.6%
Korea 0.9%1.5%1.1%18.1%
Malaysia 0.5%1.0%0.7%35.8%
Thailand # 0.0%0.2%1.1%-79.9%
# Affected by Bangkok floods in October 2011 Change all Countries -11.3%


Sales will be held in Sydney, Melbourne and Fremantle next week, when 29,269 bales are currently rostered for sale. 

Present estimates for the following two sales (Weeks 01 and 02) are 31,400 and 37,800 bales, respectively; a decrease of 24.0% over the three sale period when compared with last year.

Auction quantities are invariably difficult to forecast at this time of the year.  History shows that here can be some sudden fluctuations.

Sales are in recess in South Africa until 15 August.

 
  
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© AWIS 2012 (for permission to reprint, in part or whole, please contact AWIS)