China's lift on ban signals drop in market

China's lift on ban signals drop in market


Sheep
There is very small supply of wool across the nation this week with an estimated 27,000 bales to be offered at auction.

There is very small supply of wool across the nation this week with an estimated 27,000 bales to be offered at auction.

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AuctionsPlus' Tom Rookyard writes about the wool market activity over the past week.

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After a month of steady price retractions in March, and then a month of price consolidation in April, the wool market has finally succumbed to pressure, and slipped decidedly.

The past week saw the largest price drop in a single week for the recent quarter.

Merino dusty average fine types, broader wools and the crossbreds wools were most heavily affected.

This market retraction was reflected in the AWEX Eastern Market Indicator (EMI) losing 24 cents and 35 cents respectively on Wednesday and Thursday to slip to 1893 cents a kilogram.

When expressed in US dollar terms our market now sits at 1309 US cents. This is the first time since January that the indicator slipped below 1900c.

The removal of the Chinese embargo on South African wool exports to China has been partly signalled as a cause of this market drop.

This is due to the large volume of their wools that has been waiting for weeks to be packed and shipped for China. Other countries that buy from South Africa that have not been embargoed have been unaffected.

This is not the only factor which is impacting the market. Reports at the physical auctions suggest that the large volumes of dusty types are still looking to find a level playing field.

Due to the higher processing costs for these types, when compared to the better types, these have struggle to find competition.

The market retraction was felt also online. Buyer activity saw 83 bales sell across the week.

The buyers were seeking high yielding wools, which were in no doubt unavailable at the physical auction centres. 20- to 21-micron merino fleeces yielding around 70 per cent dry sold to 1423c/kg and 1500c/kg (greasy) or 2248c/kg and 2158c/kg (clean).

The top price lot online was a line of 19.1-micron merino fleece offered by Landmark Melbourne, which was branded WAVENEY PARK and sold for 1640c/kg (greasy) or 2294c/kg (clean).

Looking forward, there is very small supply across the nation this week with an estimated 27,000 bales to be offered at auction.

Also to note, is that that in two weeks' time, a similarly small auction supply will be available, as the Western Australia auction centre does not have a sale scheduled.

Looking at the sheep numbers we have sold, and the amount of premature shorn Merino and crossbred wools offered, wool supply pressure will continue into next season.

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