Merino market opens with unexpected flurry and Sydney closes in positive territory

Merino Fleece: focusing on the Northern region market, which opened an unexpected flurry of competition from the indent operators pushing up the MPG’s up to 37c for the day.

Unfortunately, this was short lived with the end-of-week close for the Southern markets falling away 10-30c. Despite this the merino MPG’s in Sydney mostly closed in positive territory, competition was heavily weighted to the indent and large processors with solid support from the local trading houses.

Fortunately, Moses & Son offered on the market upswing Tuesday, and we were able to clear 100% of our merino fleece offering, and 98.5% of our total offering. Looking towards this week, unfortunately I think the market will open using Melbourne’s closing quotes rather than Sydney’s.

The AWEX EMI closed on 1167c, down 5c at auction sales in Australia this week. The roster was split once again due to the Victorian labour day public holiday on Monday. This resulted in Sydney and Fremantle offering on Tuesday (at different time slots) and Wednesday, meaning Melbourne offered on Wednesday and Thursday (in isolation). What could go wrong?

The market opened positively on Tuesday with the Merino MPG’s adding 5-37c. The Northern market seen some MPG’s up to 50c dearer however Fremantle selling later in the day and was just firm to 15c dearer. Unfortunately, the 6c rise in the NMI and 5c rise in the WMI could not be maintained on Wednesday when Melbourne joined the other centres to start their sale week.

Whilst the SMI fell 1c, the NMI gave back 5c and the WMI fell 15c. the AUD V USD exchange rate appreciated, which pushed the EMI (in USD) up 9c. This factor may have been just enough to reverse the market sentiment. Melbourne offered on Thursday in isolation and the Merino MPG’s fell another 2-22c reversing the positive trend experienced on Tuesday. Despite the weaker finish to the week 94% of the 40,055 bale offering cleared to the trade.

Merino Skirtings were reported to track the fleece however my intel reports the skirtings were generally firm to the middle of the week. Loses of up to 20c on inferior types were measured in Melbourne on Thursday.

Crossbreds remained steady on the previous week’s levels and have shown minimal movements in the past month. Whilst their level remains historically low the competition is measured and to date a good spread of buyers have been willing to maintain the current levels. I suspect this unexplained price support is waning and may be coming to an end in the near future. If you are holding crossbreds then I think you should consider selling ASAP.

Merino Cardings were slightly dearer this week and like the crossbreds have been trading generally sideways for a number of months now.

Crossbred oddments have not changed in the past 4 months however I think that most sellers have refrained from offering the inferior types which attack low bids.

A growing percentage of our catalogues in recent sales are made up of wool that has been held for extended periods, as producers come to terms with the economic pressures that have suppressed discretionary spending in our major retail destinations.

China is in a world of pain domestically and in their export, customers have reduced their orders. In addition, producers have changed tact from a hold and hope mentality to sell and repent. I believe this is partly due to the increase in the official interests rates and the benefit of having cash over holding wool, grains or livestock presents a slightly better opportunity than it did 12-18 months ago.

This week’s offering climbs back to 45,887 bales, with the current world economic outlook remaining bearish I cannot see what will drive this market up in the short to medium term
~Marty Moses