AWI Commentary – Wool Sales 18 March 2021

Prices at the Australian wool auctions had their first significant retraction for the 2021 calendar year. Losses were general and across all types and descriptions in a week which had the 1 millionth bale sold for the season.

 It took to week 41 last season to reach the same milestone, although that season was interrupted by one week recess due to the cyber-attack on wool users software. The season thus far has seen over 106,000 bales or 11.5% more sold to the trade.

The Eastern Market Indicator (EMI) closed the week 2.5% or 32ac lower to  1277ac clean/kg. One third of that loss was currency related as the Australian dollar (AUD) moved 1% stronger against the US dollar (USD). Due to the same influence, the USD EMI dropped just 1.4% to 1000usc clean/kg.

This weeks’ price falls had largely been expected for the past few weeks. The pressure that has been building around wool buyers access to finance amidst larger than normal offerings for this time of the year came to a head. The cautious money-management by buyers that had led to the previous 7 sale weeks remaining remarkably stable, after a string of strong gains since the New Year, finally relented, with risk-averse purchasing taking over once again to match the softer demand. 

Shipping issues are primarily responsible for holding up exporter’s funds to allow further spending. Vessel bookings made in advance are often now subject to trans shipments being added at the last moment, rather than the direct sailings originally booked. This can add a week or two to delivery time, which hampers exporters funds, as many letters of credit (LC’s) are negotiable upon arrival at the overseas ports. LC’s with a bill of lading (BL) redemption are also being held back as port congestion and vessel delay delivery.

Merino fleece and skirtings took the brunt of most of the market falls, with all types 45 to 60ac lower by the close of selling. Traders and top makers were again the dominant buyers, although the market did see different buyers in and out of the market at various times. This allowed the market reductions to occur. Crossbreds were generally just 10 to 20ac lower whilst the cardings experienced very differing fortunes across selling centres. 46,000 bales are currently available to sell at next weeks’ auctions. 

Source; AWI