This week was a reminder of the fragility of demand when an increased offering resulted in a cheaper market and an increased pass-in rate. Despite an extra 6,000 bales offered for sale compared to last week, the trade was only able to absorb an additional 1,267 bales.

The Eastern Market Indicator (EMI) gave up 40¢ to close this week at 996¢, retreating back under the 1,000-cent level. Despite the fall back this week, from the first week of September low the EMI has gained 16.1% or 138 cents. The AUD was stronger by almost US$0.01 to US$0.712 which saw the EMI in USD terms fall by less, down 30¢ for the week, closing at 996¢. Fremantle followed suit with the Western Market Indicator losing 61¢ and now sitting at 1024¢.

An increased offering of 31,022 bales came forward. With a pass-in rate of 17.8% nationally, 25,495 bales were sold, 2,854 bales more than last week.

This week on Mecardo,  Andrew Woods looked at staple length discounts (view here). Discounts for shorter staple 17.5-micron wool are trading at minimal levels which correspond, as expected, with minimal discounts for low staple strength.

Andrew noted that “The relative out performance of shorter staple length wool (and lower staple strength wool) implies that demand from the knitwear sector is much stronger than demand from the worsted sector. The supply of short 17.5-micron wool has been falling for the past year, helping to keep discounts at minimal levels.”

Fine wool types (<18 micron) were less affected by the general market retreat, especially in Sydney where AWEX noted that wool with favourable additional measurements at times were sought after. It was a similar story in Melbourne with finer types receiving some support on Wednesday, however in Fremantle growers passed-in around one third of fleece wool.

The crossbred section was a mixed bag – and with Melbourne offering the majority of a small catalogue, the sector was quoted as largely unchanged apart from some finer types dearer.

Cardings held with a 7-cent increase in Sydney, a similar fall in Melbourne while Fremantle was off 24¢.

The week ahead….

The next three weeks offering is all 30,000 bales or more, which will test the market based on the average clearance this season to date of 25,300 bales.

Any further lift in the AUD will also be negative for wool prices.

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Click on graph to expand

Click on graph to expand

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Data sources: AWEX, Mecardo

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