Merino sheep

Another large offering tested the market with moderate falls across the week, however of note was the final day of sales when only Melbourne participated. This saw a softer opening on the day, however, it was met with strong resistance from sellers with high pass-in rates. This resulted in renewed buying strength as exporters struggled to fill their purchasing needs and the market lifted.

This week the Eastern Market Indicator (EMI) lost 10ȼ to settle at 1364ȼ/kg. The Australian dollar remained steady at US$0.68, causing the EMI when expressed in US$ to slide 13ȼ/kg to 932ȼ/kg (US).  

The reaction by buyers to lift bids on the final day when growers reduced supply (AWEX reported in early sales 40% of wool was passed in), signals that processors have a need to continue buying. It would suggest stocks on hand are not sufficient and supply coming forward is essential to maintain the supply of greasy wool to mills.

The Western market sellers were also resistant, with 25% of the offering passed, and a significant 32% of the fleece wool offering not meeting sellers’ reserves. The Western Market Indicator (WMI) finished the week at 1512ȼ/kg, down 13ȼ.

After an initial dip, Crossbreds closed the week slightly higher.  32 MPG in Melbourne finished the week up 8ȼ to 268ȼ/kg.

Cardings were steady in Sydney (928ȼ/kg, +2ȼ) and Melbourne (916 ȼ/kg, – 6ȼ), while Fremantle was down 11ȼ to 912 ȼ/kg.  

53,060 bales were eventually offered this week as lots were withdrawn prior to the sale and the total offering decreased from last week’s expectations.  The pass-in rate also fell marginally to 13%. At times this week, the pass-in rate reached 40% for fleece lots however by the end of the week buyers had stepped in and the pass-in rate fell.

Sales volumes decreased by 1,546 bales week-on-week as 46,143 bales were sold, still significantly above the average weekly sale volume this season of 36K bales.

 

This week on Mecardo, Andrew Woods looks at the rise of Vegetable Matter (VM) in the clip this year. The VM supply is plentiful, so discounts are relatively wide (for the micron categories where there is ample supply) already. The supply pressure on these discounts will remain through August and September, but they may not widen a lot further if the experience of recent years is a guide. At this stage expect VM discounts to remain near current levels through the spring.

The week ahead….

Next week more than 50,000 bales are rostered for sale, with Melbourne again having an additional Thursday sale on top of the Tuesday and Wednesday sales in the other markets.

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Data sources: AWEX, AWI, Mecardo

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