 Merino Fleece saw the offering of less specialty superfine lots for the week and in place an increase of MF4 and MF5 style fleece.
Last week also saw some large pastoral clips being offered with a noticeable increased in vegetable matter. Sydney saw the 16.5-18µ MPG’s adjust down by 58-99c whilst the 18.5-19.5 µ MPG’s losing 6c-29c. In Melbourne the MPG’s lost between 30c and 55c noting the style adjustment was not as noticeable as it was in the north. Thursday’s offering produced mixed results early in the day as new orders were being received as the news of the new price level was being digested. This resulted in a slight increase in price of the best specified and prepared fleece lots whilst the lots containing low strength and high midpoint break in the staple continuing to be harder to sell. The AWEX EMI closed on 1317c, down 41c at auction sales in Australia this week. 44,049 bales were offered with an 80.7% clearance to the trade, I would consider a reasonable result given the measured falls in the merino sector. The sharp losses pushed the clearance down across the country, as sellers were not prepared to accept the prices on offer. The 2-day sale commenced on Wednesday with Melbourne opening immediately on a weaker note as expected. As the news of the first hour’s cheaper price basis filtered through the Northern market, levels were adjusted down with the EMI for Wednesday falling by 31c. In turn when the news of the weaker market in the eastern states was received in Fremantle before the market opened almost 18% of their offering was withdrawn before the sale. The continuation of the favourable AUD exchange rate had little or no impact on this week’s market as the issues at the Melbourne dumps and container packing houses continued to erode the financial capacity of the majority of the exporters. The bottle neck at the two dumping and packing organisations is holding wool back from being shipped and hence creating financial pressures on the exporter’s ability to continually finance their weekly purchase. Given the bales offered through Auction YTD is .8% more than last year, it begs the question of why we have not seen an adjustment in the logistical capacity to deal with the quantities of wool being delivered and offered, when you consider that the Wool Production Forecasting Committee have been projecting for increases in production over the past 12 months. |
| Merino Skirtings tracked the fleece this week however the FNF types did a better job of resitting the downward price pressure. Medium and heavy VM felt the full force of the price falls as the volume of these types increased throughout the week. Crossbreds in Sydney fell 20-30 on Wednesday before a solid base was reached early on Thursday in the eastern selling centres. Once again well classed and presented clips continued to sell at reasonable levels whilst the unskirted and unclassed lots attaining substantially less money in the room. Merino Cardings experienced a 20-25c price reduction on Wednesday with Merino Locks reducing by up to 50c on selected lots. Thursday’s market saw another 20-30c reduction in the merino cardings with the shorter oddments most affected. Demand Weakens: It was less than a month ago we heard that our major markets in China, India & Italy were fully operational, and that the Chinese were receiving improved orders for their tops from Europe and the US. This week my intel is that demand for processed product in China is slowing amongst some of the major topmakers. Therefore, sales were harder to make for the locally based exporters into China. Thankfully Tianyu (China’s largest Top maker) seem to be stepping in when the market falls essentially, putting an unofficial base price in the market. They were Silicon Valley Bank (SVB) and Silvergate Bank in the US and Credit Suisse who’s share value plummeted 30% overnight. Whilst I don’t know if any of the wool industry participants would be directly affected, I am sure this news has placed negative undertones in the market as it begs the question if the cause of the collapse is specifically related to the banks under pressure or there is an underlying systemic problem. Whilst we can hope there is some renewed vigour forthcoming from the buying fraternity, my early market intelligence reveals that it could be another tough week. ~Marty Moses |