Fine times as prices hit five-year high

Fine times as prices hit five-year high


Sheep
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FINER micron Merino wool prices have delivered an early Christmas present for wool growers.

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Elders WA wool sales manager Danny Burkett.

Elders WA wool sales manager Danny Burkett.

FINER micron Merino wool prices have delivered an early Christmas present for wool growers.

At the Western Wool Centre (WWC), as well as Melbourne and Sydney selling centres last week, 18 to 19.5 micron fleece wools were selling at their best prices for five years.

Not since 2011 - a record year achieving the highest prices for all micron sizes since the Australian Wool Exchange (AWEX) took over selling Australia's wool clip in 1994 - have prices for 18-19.5 micron wools been higher.

Last week's strong competition and price push into rarely-visited territory came a week after Australian Wool Innovation (AWI) decided to further investigate an electronic wool exchange portal (WEP), proposed as a high-tech selling alternative to old-fashioned open cry auctions at selling centres.

While 18.5-19.5 micron prices still have a way to go to reach 2011 records, last week the 18 micron closing price of 1671 cents per kilogram clean was edging towards its 2011 record.

On Wednesday last week the WWC auction price for 19.5 micron fleece surged past its previous recent high of 1526c/kg, set during a June 2015 price spike, finishing the week at 1573c/kg.

In October and November prices for the other finer wools surpassed June 2015 highs and remained there with 18.5 micron wool closing the week at 1661c/kg and 19 micron wool at 1613c/kg.

AWEX market information manager Lionel Plunkett confirmed last week's 18-19.5 micron prices at the WWC, and at Melbourne and Sydney centres, were the best since 2011.

He said strong demand and climbing prices were not restricted to finer fleece wools either with skirtings prices on the same trajectory, particularly the finer types.

"We don't keep track of skirtings the same way (as fleece prices), but I think they would be there too (best prices since 2011)," Mr Plunkett said.

AWEX chief executive officer Mark Grave said growers and brokers should be pleased with the way the wool market was performing.

"Anyone who is not happy is in the wrong business," Mr Grave said.

Strong demand and rare prices ensured the spring wool clip on both sides of the country went straight to auction with AWEX statistics at the start of last week showing 676,021 bales offered so far this season, up 25,569 or 3.93 per cent for the same period the previous season.

The number of bales sold so far this season was up 38,653 or 6.51pc on last season.

The national pass-in rate was down to 3pc.

The Western Indicator rose 29c for the week to 1382c/kg, compared to the Northern Indicator which rose 28c to 1359 and the Southern Indicator up 21c to 1285 in the eastern States.

Indicative price for a 185kg bale of 19 micron wool was $1863 last week and indicative per sheep prices were $50 for a 5kg wool cut and $61 for a 6kg cut.

Strong demand and rising prices last week ignored a larger than usual total offering of more than 47,000 bales for the third week in a row across the three selling centres, including almost 2000 bales of stored New Zealand wool and an extra selling day on Tuesday at Melbourne.

With only six auction selling days, including this week, left before a three-week Christmas and New Year break in the AWEX selling schedule, bale numbers on offer at the WWC are projected to be well down on last week for the remaining sales.

This should help maintain strong competition, with wool buyers looking to secure sufficient supplies to keep Chinese woollen mills operating over the holiday period and into the New Year without disruption.

China has taken 71 per cent of wool exports so far this season.

An Australian dollar easing from near US77 cents to under 74c has helped shield Chinese, Indian, Czech Republic and Korean buyers - who pay for wool in US dollars - from auction sale price rises.

Demand for lesser specification wools has also increased as buyers look for cheaper alternatives to fill their order lists.

Up until Thursday morning at the WWC buyer interest had been largely confined to the finer end of the market and to skirtings, with a distinct drop off in demand and price push for broader wools of 20 or more microns.

But on Thursday, pent up demand spilled over to 20 micron wools and, to a lesser degree, to 21 and 22 micron wools.

By the end of trade 20 micron fleece wool had joined the finer microns in matching its June 2015 recent high price of 1506c/kg, but 21 and 22 micron wools remained well below their June 2015 recent top.

In his regional market summary for Thursday Andrew Rickwood, AWEX technical controller at the WWC, described 20 micron fleece wools as the "stand out performer, 50c dearer than yesterday's sale".

Elders WA wool sales manager Danny Burkett said rather than cap prices as was usually the case with plentiful supply, recent larger sales had actually generated stronger demand.

"Supply has actually driven increased demand," Mr Burkett said.

"Everybody is aware that in the new year it is likely there is not going to be very much wool on offer," he said.

Spring shearing has been completed and brokers are seeing reduced volumes of wool, mainly from lamb shearings, late shearings or weather-disrupted shearings, as mixed farmers swing over to crop harvest.

Because of the good prices there was little wool left "on farm or in store to supplement" the smaller volumes about to come up for sale, Mr Burkett said.

But demand had also seen buyers less concerned about specification.

"The usual discounts for over-length or mid-break (wools) have just disappeared," he said.

An extraordinary season producing exceptional quality wool had also played a large role in the demand and current prices.

"In all my time in wool I have never before seen a product on offer better suited to top making than in the past four months," Mr Burkett said.

"The quality (of the wool) has been absolutely sensational.

"(WA wool growers) are leading the market.

"I'm very glad to see our fine wool growers are now achieving excellent returns."

He said he believed the strong demand and top prices would carry through to Christmas.

p As reported last week, the AWI board last month accepted a unanimous recommendation from a multi-representation working group that it proceed with further investigation of a proposed wool exchange portal (WEP).

But working group chairman Will Wilson stressed to the AWI annual meeting that the group recognised the open cry auction system "serves the industry well" and that the WEP was intended to be an additional alternative selling system, not a replacement.

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