Gross revenue for Australian wool exports passes $2 billion

Gross revenue for Australian wool exports passes $2 billion

GROSS returns of $10.47 million at the Western Wool Centre (WWC), $18.92m in Sydney and $29.55m in Melbourne last week, pushed total revenue from live wool auctions so far this season past $2 billion according to Australian Wool Exchange (AWEX).

In AWEX’s 20 April Weekly Wool Market Report on week 41 sales said gross revenue from its live wool auctions held since July 1, now totalled $2.04b.

As was forecast in Farm Weekly, this was eight weeks earlier than the $2b revenue milestone was passed in the previous season.

With eight trading weeks left this season at the WWC and 10 trading weeks left at Melbourne and Sydney selling centres – there were no live wool auctions this week because of Easter and the WWC traditionally does not trade the fourth-last and second-last weeks of the season because of insufficient wool to offer -AWEX is on target to smash last season’s gross wool auctions total of $2.24b.

In the prior 2019-20 season, when only the final three months of that season were affected by the COVID-19 pandemic’s impact on global trade, total gross live auctions revenue did not quite get to $2b.

It topped out at $1.97b, indicating just how strong the combination of demand for wool and prices buyers are prepared to pay, have been so far this season.

But demand and prices are only part of the story this season, volume has also played a part, as AWEX pointed out in last week’s market report.

Compared to the previous season, the total number of bales offered at the WWC and Melbourne and Sydney selling centres “continues to track higher”, the report stated.

“There have been 196,050 more bales put through the auction system compared to this time last year, an increase of 15.4 per cent,” it stated.

In what could be a sign of good things to come when WWC trading resumes next week, the main Melbourne market moved further ahead of both the WWC and Sydney markets before the close last week.

Merino fleece prices at the WWC lost some ground across the micron segments last week, with falls of between 25 cents (19.5 micron to 1488c per kilogram clean) and 9c (21 micron to 1274c/kg).

Sydney fleece prices also lost ground, but with generally smaller slides than at the WWC for corresponding micron segments across the week.

So the main Melbourne wool centre – which normally sets immediate prices trends for both the WWC and Sydney centre – was on its own with firming prices in all micron segments across last week.

The widening gap between WWC fleece prices and the equivalent Melbourne prices now ranges from 69c/kg (18 micron) to 20c/kg (21 micron), with WA wools cheaper.

Given there were no wool auctions this week and buyers would normally be looking to top up the wool supply chain from next week’s auctions, it would seem more likely that WWC prices will move up closer to Melbourne prices than Melbourne prices will come back to WWC prices.

But the first deaths from the current Omicron COVID outbreak in Shanghai, reported Monday – albeit of three elderly unvaccinated residents – and a likely extension of the three-week lockdown of that city of 25 million people and China’s main commerce hub, into a fourth week, means nobody can predict with certainty what the wool market will do next week.

Most of Australia’s wool goes to China – even much of the wool destined for Europe goes via China for early-stage processing – so disruption to commodities flow through such a major port as Shanghai – it’s the world’s busiest container port – has significant implications for local suppliers.

The Western Market Indicator finished last week down 4c to 1417c/kg, while the benchmark Eastern Market Indicator, by comparison, was down 2c to 1367c/kg.

Of the 7891-bale WWC offering that was left last week after 10.4pc of the initial listing was withdrawn (3.9pc withdrawn in Melbourne and 2.9pc withdrawn in Sydney), 6637 bales changed hands for a passed-in rate of 15.9pc (10pc in Melbourne, 10.8pc in Sydney).

National trader Techwool Trading, local trader PJ Morris Wool and Chinese indent company Tianyu Wool headed the WWC buyers’ lists in that order both trading days.

Source: Farm Weekly