Australian Wool Sales – AWI Commentary (30 June 2022)

This weeks’ season-ending Australian wool auctions finished on a very poor note. Every wool type and description on offer sold to cheaper levels. In many cases these falls were heavy and well over 100ac clean/kg in magnitude. The Merino fleece and skirtings at the finer (less than 19 micron) end of the market was most affected. Crossbred wool types and cardings held on rather well in comparison but still experienced 5 to 15ac losses.

The Eastern Market Indicator (EMI) lost 3% or 44ac to close out the 2021/22 season at 1430ac/clean kg, a seasonal gain of just 10ac from the opening sale of the season. The USD EMI fell this week further than the Aussie prices as the AUD rate against the USD also weakened. A 3.3% average value was lost in USD this week as that indicator closed at 986usc/clean kg. This is a seasonal loss of 6.9% in USD terms from the opening sale.   

Western Australia re-joined the auction action this week and 2.2% or 34ac was eliminated off the WMI (Western Market indicator) to close at 1529ac/clean kg. The WMI highlights what an overall better season the Merino wools have had (not many crossbred wools in WA), given that the WMI advanced in value by 87ac or 6% from the opening sale in July 2021, compared to the 0.7% improvement of the EMI.  

With the large drops in value, the national clearance rate fell to just 79.7% of all wool offered being cleared to the trade. This figure was strongly influenced by the high passed in rates of the Merino fleece sector in Melbourne(24.5%) and Fremantle(30.5%), but oddly Sydney saw just 10.7% passed in.

The large volumes available both this week and over the next two weeks let buyers ease their purchasing intensity substantially and allowed them to buy freely to their advantage. Put in perspective, prior to this week there had been 96,261 bales offered in three weeks, whilst this week and the next two will see an estimated 139,080 bales or 44.5% more wool going before the trade in the same time. This is a similar pattern each year and should be somewhat predictable.

Additional factors also conspired against the market fortunes this week. One was a serious fire at one of our largest processors in China preventing their normal operations. Also, an adverse shipping situation occurred whereby delays and cancellations of vessels saw some buyers funds are being delayed by 10 days or more than what was originally accounted for.

Next week sees the commencement of the 2022/23 new selling year and a large 52,000+ bale sale series is scheduled.

Source: AWI