Changes mooted to keep WA wool centre

26 Nov, 2015 01:00 AM
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p Modiano wool buyer Greg Horne says efficiency improvements will come from combining the two auction rooms at the Western Wool Centre.
p Modiano wool buyer Greg Horne says efficiency improvements will come from combining the two auction rooms at the Western Wool Centre.

ENSURING WA retains its selling centre and improving woolgrower returns is behind efficiency improvements mooted for the Western Wool Centre.

Wool buyers and brokers have broadly agreed the two auction rooms at the WWC - one selling fleece and the other selling pieces, locks and crutchings - should be combined into one room.

The proposed move should ensure two-day sales are held most weeks at the WWC despite declining offerings.

For more than 10 years, the trigger for a two-day sale has been an offering of 800 lots in one of the auction rooms.

Combining the rooms should ensure the 800-lot trigger is reached most weeks.

The WWC is the only one of the three national wool auction centres to have regular one-day Wednesday sales interspersed between two-day sales.

Melbourne and Sydney centres have sales on Wednesday and Thursday each week despite total bale offerings at the Sydney centre sometimes being less than at the WWC but offered in smaller lots.

What happens in Melbourne and Sydney on a Thursday, on the weeks when there is no Thursday sale at the WWC, generally has a delayed influence on the WA wool market the following Wednesday.

But a catch-up is not guaranteed.

More than 90 per cent of the Australian wool clip is sold by open-cry auction at the three centres.

A change to the selling system was proposed at a meeting of 24 wool buyer representatives and wool brokers at the WWC after last Thursday's auction.

The meeting was jointly called by Modiano buyer Greg Horne and Dyson Jones broker Lyndon Hosking.

They represent WA on the National Auction Selling Committee (NASC) which sets the annual auction program for the three centres.

A summary of last week's meeting is expected to be emailed to wool buyers, exporters and brokers this week by Mr Hosking for confirmation.

If the general consensus achieved at the meeting is repeated with agreement on the summary, it is expected an extraordinary NASC meeting will be called before the end of the year to formally consider combining the two auction rooms.

Mr Hosking said it was hoped to introduce the single-auction room change from the first sale after the three-week Christmas and New Year recess.

As he left last week's meeting Peter Scanlan Wools buyer Steve Noa said: "No one wants to see this centre close."

It was a reference to a controversial WAFarmers' submission to the Wool Selling System Review (WSSR) commissioned by Australian Wool Innovation (AWI).

That submission supported one central national selling centre in Melbourne as an alternative to the current selling system.

Mr Horne said there was "surprisingly good support" from buyers and brokers at the meeting for the single sale room proposal.

"We think it would be disastrous to not have a selling centre in WA," Mr Horne said.

"It (WWC) provides market feedback to woolgrowers and assistance to growers through the brokers.

"If there was no selling centre we would be just like Adelaide or Brisbane, there would be no one to spruik for WA wool."

The two WWC auction rooms start selling at the same time, so wool brokers need at least two auctioneers and two recorders attending each sale day.

Buyers may also require a specialist bidding representative in each room.

"Selling all of the wool in one room would be much more efficient," Mr Horne said.

He said buyers and brokers believed there were "too many

one day sales" which impacted on the viability of the centre and on returns to woolgrowers.

"Sometimes our growers miss out on the Thursday rises in prices at Melbourne and Sydney if the market happens to soften before the following Wednesday," Mr Horne said.

"We also feel that sometimes too much wool goes up on a Wednesday for us to digest when it's a one-day sale.

"For example, if I've got an order to buy 300 bales, it doesn't matter how much wool is on offer, I'm only going to buy 300 bales.

"I think growers suffer because of that, two-day sales will improve competition for wool.

"Personally, I prefer two-day sales because it gives me a second crack at buying to fill my orders."

Elders WA wool manager Danny Burkett confirmed he was instrumental in garnering support for a compromise of combining sale rooms so two-day sales became more frequent.

"It would even the value across the whole wool market," Mr Burkett said.

"It would also give wool brokers the opportunity to streamline their businesses."

Primaries wool manager Greg Tilbrook was another who spoke in favour of the proposed change.

The Western Indicator finished last week up seven cents at 1296 cents a kilogram clean with small rises across all microns and good support for better specification wools.

Across both days a total of 10,538 bales were offered with 9147 being sold.

By comparison, the Southern (Melbourne) Indicator eased 4c to 1230c/kg on a 20,388-bale offering with 19,009 bales sold.

The Northern (Sydney) Indicator remained steady at 1279c/kg on a small offering of 9456 bales of which 9087 bales sold.

The WSSR panel is scheduled to present its findings to AWI before the end of the year.

It received 68 industry submissions in response to its initial issues paper and 28 in response to a subsequent discussion paper.

In a second submission in September, WAFarmers reversed its support for a centralised selling system and the WWC closing.

It's second submission acknowledged that most of the wool sold in WA is destined for China so there are "significant cost savings and logistics advantages" in selling wool at the WWC, as well as same-time-zone convenience in dealing with Chinese buyers.

There was also a chance WA wool could be "discounted" because of appearance if sold next to Eastern States' wools at a centralised location, WAFarmers argued.

It also argued that wool levy funds should not be spent on a Wool Exchange Portal (WEP) proposed by the WSSR panel in its discussion paper.

There was "no clear evidence" the WEP would benefit growers or would be embraced by them any more than existing on-line wool selling tools were, it said.

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FarmWeekly
Mal Gill

Mal Gill

is wool and dairy writer for Farm Weekly

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