Some,Bits,Of,Fleece,Sit,On,The,Shearing,Shed,Floor

There were some big falls again for finer wool types this week whilst the medium indicators remained relatively stable. Poor economic signals coming from China and continued high inflation rates around the globe are weighing down fine wool demand, especially for the ‘lower’ quality end of the finer offerings.

The Eastern Market Indicator (EMI) has failed to post a lift for the 9th consecutive week, losing 13ȼ this week, to 1306ȼ/kg, the lowest level for 16 months. The Aussie dollar rose (+ 0.21ȼ) to 0.67US and in US dollar terms, the EMI also fell, by 6ȼ to 880ȼ/kg.

This week can again be characterised by stronger bidding sentiment for the medium/broader type wools while not so much for the finer microns. 19 -22 MPG’s were more positive, posting similar results to last week, with movements ranging from +11 to -15ȼ  across the three selling centres.

The finer microns were hammered in the past two weeks with the 17.5 & finer MPG’s falling between 60 to 135ȼ this week, whilst the 18 – 19 MPG’s didn’t fall as harshly, dropping between 9 to 60ȼ.  The 17 MPG in Melbourne for example, has dropped 272ȼ (-10.3%) in the past three weeks to where it sits now at 2,363ȼ/kg, closing the gap towards the 21 south MPG. (figure 2)

Over in Fremantle, due to their wool supply being skewed more towards the medium type wools, the Western Market Indicator (WMI) indicator didn’t fall as much as its eastern counterparts, finishing the week 6ȼ lower at 1447ȼ/kg.

Crossbreds were mixed again, with minimal price rises & falls. Cardings had a strong week in Melbourne and Fremantle lifting 11 & 21ȼ respectively, while in Sydney the indicator dropped just 1ȼ.

Similar to last week’s figures, there were just over 37,000 bales on offer this week and the pass-in rate was slightly higher at 12%, resulting in 33,177 bales sold. Average bales sold this season is slowly falling back in line with last season’s average (36,000).

Andrew Woods took a closer look at fine wool prices over the past twenty years, in this case the 16 micron, and why some types of finer wool, particularly the ‘poorer quality types’, are trending downwards at the moment. He also examined combing premiums to carding prices, which identified some more possible bad news for the finer wool types, with some possible downside risk flagged for the 16.5 micron fleece indicator he chose to look at in his article.

The week ahead….

With plenty of negative macro-economical signals putting downward pressure on global markets, there is uncertainty about how consumer discretionary spending will be impacted, and demand for wool. Next week there’s 39,025 bales on offer for sale across the 3 main selling centres.

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Data sources:

AWEX, AWI, Mecardo

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