Merino fleece trades sideways while Merino skirtings draws premiums up to 30c/kg

Merino Fleece seemed to trade sideways tending a few cents cheaper as a result of a strong currency exchange rate whilst the competition held the finer MPG’s relatively steady, the medium and coarser merino MPG’s measured solid falls by the close of the week.

Competition was dominated by the three large Chinese Top Makers whilst the large trading exporters resisted booking business with the promise of thin or no margins being offered by their customers.
Merino Skirtings: A generally unchanged skirting market with premiums of up to 30c being paid for lots showing good colour and free of cotts and jowls. With the lower weekly offerings some exporters are reporting difficulties in finalising their orders within the week, with some standard orders taking up to three weeks to complete. This creates an elevated cost to gathering the order.

Crossbreds: reacted to the irregular competition with unbalanced prices on the opening day of sale. More confidence was shown in the competition received on Wednesday. The limited offering of 25 & 26µ XB Fleece with best style and specifications were at times 30 dearer. The average rise in these categories 15-20c dearer whilst the 28µ and coarser MPG’s holding within a few cents last week.

Merino Cardings: had a better week with prices in the Eastern States operating close to last week’s levels. Conversely Fremantle MC fell 31c with severely reduced buyer support in this center.

The market intel for the upcoming weeks mirrors the same pattern seen over the past few months. Demand at retail remains subdued, supply of wool is diminishing, and pipeline stocks are low.

We are experiencing a period of equilibrium in the supply demand curve with both sides at their low point. Traditionally the May and June are periods of low receipts in brokers stores and this year is no exception.

My concern is what will happen when the offerings revert back to 45,000 bales per week. The crystal ball lacks any short-term change in the current demand therefore the short-term outlook remains fairly dim.

This week’s offering has been scheduled for 33,134 bales which will be the smallest offering since sales commenced in January 24. Based on the low offerings the early market intel is that the market should remain solid for most Merino and Crossbred types.

~ Marty Moses