Weekly Wool Prices

Week Ending May 11 (Week 45)

14 May 2012

The AWEX Regional Indicators finished 1.0% lower, on average, at sales in Sydney, Melbourne and Fremantle this week when the US exchange rate fell by 1.9%.

This week’s market was again characterised by soft demand. It eased on both days in the East, but showed some recovery in the West on Thursday, when the AWEX WMI rose by 9¢, led by good demand for wool from 18.5 to 19.5 microns. Some of the season’s leading buyers were quieter than usual on Wednesday, but were more active on Thursday.

Looking at the market in US terms shows that the EMI eased by 38¢ on Wednesday, but was settled on Thursday when it moved down by an additional 1¢. Global financial markets were unsettled this week (see below). The history of the last four years indicates that both the US exchange rate and prices in US currency fall at such times. How much of this week’s fall in prices in US currency was due to this and how much was due to other factors is not known.

The better wools continue to be sought after and the poorer type wools discounted. All Merino and coarse crossbred average AWEX MPGs eased during the week. Fine crossbred wools were the only wools whose average AWEX MPGs moved up during the week.

Looking at the AWEX Market Indicators at the time last year - the EMI at 1155¢ is 168¢ less than in the same week last year; and the season average of 1219¢ is 125¢ higher than the season average at the end of Week 45 last year. The WMI was 103¢ less than in the same week last year; and the season average of 1173¢ is 149¢ greater than the season average at the end of Week 45 last year.

From a broader perspective, the market remains at high levels, particularly in US Currency, where the EMI is the equivalent of 1167 US¢.

In other countries, the Cape Wools Indicator in South Africa was down by 1.0% and their US exchange rate was down by 2.2%.

RegionLast SaleDay-to-Day Changes (Week 45)Sale-to-Sale ChangeClosing IndicatorSale-to-Sale Changes
WeekIndicatorTuesdayWednesdayThursdayUS ¢Euro ¢
Eastern441170No Sale-11-4-15 (-1.3%)1155-39-16
Northern441195No Sale-9-4-13 (-1.1%)1182-37-14
Southern441151No Sale-12-4-16 (-1.4%)1135-39-16
Western441178No Sale-14+9-5 (-0.4%)1173-29-8

33,168 bales were on offer, compared with 42,540 bales last week. 15.3% were passed in, comprised of 10.6% in Sydney, 10.0% in Melbourne and 33.6% in Fremantle. Pass-in rates for Merino fleece and skirtings were 15.9% and 18.6%, respectively. 28,092 bales were cleared to the trade.

The year-to-date offering is now 55,816 bales less (3.2%) less than at the end of the same week last year.

Although it was Budget week in Australia, the main factor influencing current Australian exchanges rates is again the uncertainties within the Eurozone, particularly in Greece; and the resulting loss of global confidence.

The results of last weekend’s elections in Greece have left an uncertain outcome about whether the country will now be governed by parties who support the EU imposed austerity measures; or by parties that are opposed to the austerity measure. Global stock markets weakened and the, now familiar, transfer of investor funds from Australia to the “safe havens” of US Treasury bonds, the Swiss Franc and the Yen occurred, resulting in lower Australian exchange rates.

Exchange Rates
(Reserve Bank)
Last SaleDay-to-Day ChangesSale-to-Sale
Change
Closing ValueSeason Min & Max
MondayTuesdayWednesdayThursdayMinMax
United States 103.05-1.59+0.46-1.18+0.31-2.00 (-1.9%)101.0595.00110.55
Euro78.41-0.32+0.09-0.55+0.42-0.36 (-0.5%)78.0571.5082.27

The easing in the average AWEX MPGs was least from 18.5 to 20.0 microns and from 23 to 24 microns.

Sale-to-Sale Changes in Average AWEX Merino Micron Price Guides (MPGs)
Micron16.517.017.518.018.519.019.520.021.022.023.024.0
Since Last Sale:
Change ¢ -18-17-15-4-8-6-9-15-15-6-9
Change % -1.1%-1.1%-1.0%-0.3%-0.6%-0.4%-0.7%-1.1%-1.2%-0.5%-0.8%
Since Start of the Season:
Change ¢ -753-667-524-399-293-214-154-121-108-23+46
Change % -32.0%-30.6%-26.6%-22.3%-17.7%-13.7%-10.4%-8.5%-7.8%-1.8%+4.2%
Since Same Week Last Year:
Change ¢ -790-701-583-425-269-153-56-8+11+32+116
Change % -33.0%-31.6%-28.7%-23.4%-16.5%-10.2%-4.0%-0.6%+0.9%+2.6%+11.3%

Skirtings had a better week, with good demand for the medium Merino wools of good length and with a low level of VM. The pass-in rate of 18.6% was closer to the pass-in rate of 15.9% fleece wool than in recent weeks.

Crossbred prices were mixed with increases in their average AWEX MPGs among the finer types and increases among the broader types.

Oddment types were down in all centres on Wednesday, but did better on Thursday when some recovery occurred in the South and prices were steadier in the West.

Sale-to-Sale Changes in Other Average AWEX Price Guides
Micron25.026.028.030.032.0MC#
Since Last Sale:
Change ¢+7+22-16-12-12-13
Change %+0.7% +2.5%-2.4%-2.0%-2.3%-1.9%
Since Start of the Season:
Change ¢+113+33-39-34-62-125
Change %+12.6% +3.8%-5.7%-5.5%-11.0%-15.5%
Since Same Week Last Year:
Change ¢ +45+2+1-31-84
Change % +5.3%+0.3%+0.2%-5.8%-11.0%

# Average Merino Cardings Price Guide

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

Current export data and the percentage changes from last year, for the top five export destinations and three other key destinations follow.

Country% Share of Australia’s Wool Exports by Weight of Wool ShippedYear-on-Year % Change in Wool Exports
February 2012July - February This SeasonJuly - February Last Season
China73.6%74.4%74.6%-10.9%
India5.1%6.8%7.1%-14.9%
Italy3.8%5.7%5.6%-8.3%
Czech Republic3.8%3.6%4.0%-18.3%
Taiwan1.2%2.2%2.5%-7.8%
Korea1.3%1.6%1.2%+20.6%
Malaysia0.7%1.1%0.7%+56.9%
Thailand #0.0%0.3%1.2%-77.0%
# Affected by Bangkok floods in October 2011 Change all Countries-10.7%

Sales will be held in Sydney, Melbourne and Fremantle next week, when 40,955 bales are currently rostered for sale. Present estimates for the following two sales (Weeks 47 and 48) are 36,940 and 39,800 bales, respectively; an increase of 11.8% over the three sale period when compared with last year..

In South African sales, the Cape Wools Indicator was down by 1.0% since last sale two weeks ago against a 2.2% depreciation of the Rand against the US Dollar and a 0.4% depreciation against the Euro. 7,715 bales were on offer..