Australian Wool Market Sales 28 August 2023 – AWI Commentary

This week’s auction activity at the Australian wool sales saw prices advance across all types and descriptions. The exporters and direct to mill buyers were intent to continue their positive approach to buying and most grower sale lots achieved returns of 10 to 20ac/clean kg more than the opening values.

In terms of the leading market price indicator – the EMI – closed higher tat the end of the month of trading. That’s the first time that has happened since 2018. The jury is out whether this points to the lower supply forcing values upward, or is demand improving? The market certainly needs to keep trending to a similar fashion for evidence of that latter scenario, but the current rising wool prices will give some semblance of confidence for wool growers.

Another factor that is apparent in the auction rooms is the variety of end users that have been active in the market. Our four largest import partners have been keen purchasers and the willingness to pay that extra 30 or 40ac/clean kg to ensure supply to their mills is very stark. As one leading trader commented upon return from China, “business in just slightly better, but the sentiment from the majority he met with was better than he has witnessed the past few years.”

Within the Merino fleece sector, the wool types that are being most sought at present is sale lots featuring the higher yields. Much of the current selection on offer – particularly from the general Southern Australian growing regions – is lower in yield than normal due to the tough, dry growing conditions. Whilst all other specifications are good to very good in some instances, the lower yield is preventing full competition as most contracts written into China require minimum washing yields of 68% or 70% as an average for the batch.

Some strong buying from China ensured crossbred wool types became dearer again and a general 15ac was added to the values. This continues the 2-year run upward price trend of these wools. Carding and carbonizing wools were also well sought and by week’s end were 5 to 15ac dearer. Next week will offer just under 30,000 bales Australia wide. Auctions will be held on Tuesday for all three selling centres, but due to restricted volumes available in Fremantle, WA just the 2 Eastern centres will sell Wednesday.

Source: AWI