Price correction continues despite wool supply slump to levels of mid-1990s

Supply slide to 1995 lows fails to halt continued price contraction

Sheep
Even with very tight supplies, national and online wool auctions failed to spark much buyer demand last week.

Even with very tight supplies, national and online wool auctions failed to spark much buyer demand last week.

Aa

Even as supply falls to 1995 lows, national and online wool auctions fail to spark much buyer demand last week.

Aa

Last week was another 'tough day at the office' for wool, with the market feeling the full force of global COVID-19 restrictions.

An interesting statistic from the Australian Wool Exchange (AWEX) was that national auctions had the second smallest offering since 1995, at only 15,800 bales going under the hammer.

Despite the low supplies, the market retraction was reflected by a loss in the AWEX Eastern Market Indicator (EMI) of 12 cents a kilogram on Tuesday and a further 20c/kg on Wednesday.

The indicator closed the week at 1139c/kg - its lowest point since 2015. In US dollar terms, this was equivalent to 782c/kg.

The wool market is continuing to step backwards, as little confidence at a consumer level offers no direction for the entire supply chain.

At Week 51 of online auctions held on AuctionsPlus last week, Elders Wool and Australian Wool Handlers (AWH) offered 117 bales from Western Australia.

All the usual buyers were in attendance, along with several growers watching the sale.

Lines of short cardings took the lion's share of interest, as - clearly - the fleece wool offering at physical auctions covered all demand.

At the online sales, a lot of short (30 millimetre), 17.7-micron Merino lambs fleece - with a low vegetable matter of 0.6 per cent - sold to 730c/kg (greasy). A line of 30mm, 17.6-micron Merino lambs pieces sold for 645c/kg (greasy).

The AuctionsPlus Online Offer Board results reflected the lack of demand in the physical market that saw an almost 3 per cent contraction in the AWEX EMI during the week. Only nine bales sold on the platform for the seven days to Friday.

The top priced lot online was for Merino pieces with a fibre diameter of 14.9-micron that was offered by Nutrien Melbourne, branded NIAMI/M and which sold for 805c/kg greasy.

Looking forward, there are three more weeks of auctions before the annual July recess.

In the coming weeks, the two major factors on the market will be: the need for overseas mills to stock-up before the break; and low buyer demand.

There are an estimated 30,000 bales each week to be offered across all auction selling centres, and this increased volume will really test the market.

Aa

From the front page

Sponsored by