Strike action, cyber attacks and rolling stoppages all impacting wool market

A combination of cyber attacks, strike action and rolling stoppages by workers at a large shipping company has had a substantial impact on normal wool market operations.

The negative impact created a bottleneck at the wharves, slowing the shipping of wool and therefore slowing payments to exporters letters of credit which require a bill of lading to activate the payment.

Whilst trying to find some positives in the 120 + mm rain event during the week, we also sold some wether lambs in the Wagga sale. I’m not sure if the $40 rise in the M Wether lamb market will offset the damage to the fences.

Thankfully our grain is in the silos, but we sympathise with the many clients that have not completed their harvest. However, we will celebrate the small wins and watch the lucerne (and weeds) grow and keep a watchful eye on the expected increase in blowfly and mosquito activity.

This week’s National offering is 47,917 bales with Melbourne’s roster extended to a three-day sale to accommodate the increased volumes. Next week sale is the second last sale before the 3-week Xmas recess. Whilst this week’s rise in the AUD from an opening of 65.50c to 66.70c mid-week, this offset was increased by competition.

Currently the AUD is 66.05c and if this reduced level continues into next week, I feel the market will be fully firm for the merino combing sector. There is some concern that an increasing supply of crossbred combing wools may put downward pressure on their price.

The AWEX EMI closed on 1166c down 4c at auction sales in Australia last week. After two successive weekly rises in the EMI totalling 42c, this week felt the pressure of the rising value of the AUD v USD topping out at 66.6 USc on Wednesday, before falling back towards 66.1USc the time of writing.

The Forex caused the EMI in USD terms to rise by 8c for the week, to total a three week rise of 52USC (+7%) as new interest from Chinese indents sparked widespread competition, not seen for some months. The offering of 46,908 bales resulted in a 90.5% clearance rate, a decline from the 95% clearance seen over the past few weeks. This was heavily influenced by the 16.2% pass in rate measured in Fremantle.

Merino Fleece opened tentatively on Tuesday with Melbourne immediately trading cheaper. Whilst Sydney resisted the falls early in the day the market tone was quickly aligned, the sale closed falling between 10-17c. Wednesday’s market opened slightly better with the end of day quotes.

Competition was widespread with the large traders being pushed by the Indent operators and the Large Chinese Topmakers. Superfine Merino types finer than 18 microns helped maintain the overall market with prices generally 20c dearer.

The better specified and more stylish wools were 40/50c dearer at times, with the surprising activity of two or three Chinese orders competing against – and often outbidding -the normally dominant European exporters.

Merino Skirtings opened with an irregular heartbeat and close slightly weaker on Tuesday. Like the merino fleece, Wednesday saw increase participation from exporters which pushed selected skirtings up 30c.

Crossbreds appear to be under some price pressure as the weekly volumes have been increasing on the Eastern Seaboard. Melbourne offered 6,500 bales of XB wool this week which resulted in falls of 3-23c. FNF, best style and length lots were least affected whilst lots that were poorly prepared or unclassed with high VM or poor style came under elevated price pressure.

Merino Cardings held their ground in the Northern markets (-1c) whilst the Southern (-20c) and Western markets (-21c) were substantially cheaper. Currently the sales of wool categories that make up the MC, continues to be a major concern, as it approaches a historic low point over 5y (3.6%), 7y (2.5%) and 10y (1.8%). There were some reports of emerging orders from Korea materialising, however it is felt that these orders will be filled from exporters inventory before we see any impact on the market.

~ Marty Moses