The outbreak of conflict (war) between Russia v Ukraine has escalated the nervousness in logistics and finance.
The AWEX EMI closed the week on 1407c – down 14c at auction sales in Australia last week with the 50,120 bale offering added undue pressure which was articulated in the reduced clearance of 87.8%.
All selling centres operated on Tuesday and Wednesday with Melbourne sales extending into Thursday in isolation.
The escalation of the Russia V Ukraine unrest had an impact on the AUD v USD exchange rate which resulted in a 1.1c rise in the AUD over the selling week and a 1.45c rise over the full week.
The market opened slightly softer across all centres early in the week with the EMI falling by 3c on Tuesday. The negative price trend continued into Wednesday with another 12c being taken from the EMI. All eyes were on the EMI in Melbourne on Thursday which rallied slightly, posting a 2c recovery. It is important to note the EMI in USC terms rose 5c for the week and reflects positively on the underlying demand for Australian Wool.
Merino Fleece finer than 17 continued to be keenly sought after and posted rises of 11c for the week. 17.5 to 20μ MPG’s fell just 6-8c with the 18 MPG taking on a slightly heavier loss of 17c. In addition, the 21 MPG posted the heaviest loss of 25c in the northern region and 28c in the southern region. The Certified NM lots whilst still keenly sought and demonstrating sizeable premiums, were occasionally out performed by the Ultra and Superfine spinner types which attracted keen competition from European spinner interests.
Merino Skirtings normally follow their fleece counterparts however this week they seemed to have developed their own life, posting rises of up to 15c for the week. The exception was noticeable across the lots containing heavy VM which barely maintained last week’s price levels.
Crossbred combing once again traded in a narrow price channel, well specified and classed lots clearing to the trade whilst poorly classed or unclassed lots represented a large percentage of the passed in statistics.
Merino Cardings were erratic early in the week and peeled off 23c in Sydney and 14c in Melbourne with Fremantle posting a 5c rise bucking the trend. Carding buyers were very selective on the quality of lots purchased, leaving many lots underperforming for price and passed in.
The challenges which the wool market has been facing (finance and logistics) added new contenders to challenge confidence in our markets. The outbreak of conflict (war) between Russia v Ukraine has escalated the nervousness in logistics and finance.
This week the national offering increases to 52,462 bales being offered in Sydney, Melbourne and Fremantle on Wednesday and Thursday due to the Western Australian Labour day holiday.
The market intelligence is a little muddy at this stage however I believe well measured and well classed clips will maintain last week’s levels but I am not as hopeful for lots that have poor specifications and preparation.
Long term, the concerns of the effects of the unrest in the Eastern European Bloc may put further pressure on interest rates and ultimately have impact on trade finance.
-Marty Moses, Moses and Son