Wool heads into record territory

Wool heads into record territory


Sheep
Australian Merino Exports managing director Chris Kelly in the Western Wool Centre auction room last week. Some brokers believe the extra buyer in the auction room contributed to bidding competition for the limited supply of wool on offer and helped push prices to record highs.

Australian Merino Exports managing director Chris Kelly in the Western Wool Centre auction room last week. Some brokers believe the extra buyer in the auction room contributed to bidding competition for the limited supply of wool on offer and helped push prices to record highs.

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WITH sales generating $10.5 million on a small offering at the Western Wool Centre (WWC) last week, record prices were set for 19.5 through to 22 micron wools as WA emerged as the national market leader for broader wools.

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WITH sales generating $10.5 million on a small offering at the Western Wool Centre (WWC) last week, record prices were set for 19.5 through to 22 micron wools as WA emerged as the national market leader for broader wools.

Very strong competition for limited supplies of Merino fleece on Wednesday saw buyers scrambling to fill orders and prepared to pay between 88 and 110 cents a kilogram clean more for finer 18.5 and 19 micron wools than they had the previous week when live auctions resumed after the three-week annual recess.

Australian Wool Exchange (AWEX) technical controller at the WWC, Andrew Rickwood, pointed to an “impressive” Merino fleece clearance rate of 99 per cent on a 3153-bale offering.

“All types and descriptions (of wool) enjoyed the lift in prices regardless of style or spec,” Mr Rickwood said in his market report.

But 20 and 22 micron fleece were the stars on Wednesday, with indicative prices up 90c and 75c respectively, to set new AWEX western region records of 1734c/kg and 1611c/kg.

Thursday’s trading was “more subdued”, according to Mr Rickwood, but against a general expectation the market would ease, prices remained firm.

Indeed, it was the turn of 19.5 and 21 micron fleece to set local AWEX records, with 19.5 wools creeping up a further 2c to 1831c/kg and 21s jumping 15c to finish at 1666c/kg.

While shy of a record, the 18.5 micron indicative price was also up 10c on the previous day, at 2081c/kg, and 19, 20 and 22 micron wools held onto all but about 5c of the previous day’s incredible gains.

Again, the pass-in rate on the 3195-bale offering was less than 2pc.

The Western Indicator, a general guide to the strength of WWC trading, had broken through the 1600c/kg barrier for the first time the previous week and went on to finish last week at an all-time national high of 1680c/kg.

At that price, the Western Indicator purports WA’s wool market to be the strongest in Australia as it heads all other wool indicators – the much-quoted Eastern Market Indicator (EMI) at 1614c/kg, Northern (Sydney) Indicator just behind at 1679c/kg and the Southern (Melbourne) Indicator trailing at 1573c/kg.

To put that further into perspective, like the Western Indicator, the EMI and northern and southern indicators also finished last week setting records.

As well, the WWC’s closing indicative prices last week for 19.5, 20 and 22 micron wools were also the highest nationally.

Dyson Jones’ auctioneer Peter Ryan sold the top-priced WWC lot for the week on Thursday, a two-bale line under the Westbrook stencil of superfine 16 micron, 89 millimetre long fleece yielding 75.3pc and with only 0.6pc vegetable matter contamination from seed.

Classed as MF4E, it sold for 1791c/kg greasy, equivalent to 2378c/kg clean, and the highest price paid so far this year at the WWC.

Strong bidding competition carried on right across the wool range last week, delighting brokers.

“The market went mad (on Wednesday),” Primaries of WA wool manager Greg Tilbrook said.

“I sold 21 micron wool at better than $16 (a kilogram), I’ve never sold 21 micron at over $16 before,” Mr Tilbrook said.

“But the big question of course is how long will it last?”

Elders’ wool manager Danny Burkett told clients in the WWC auction viewing room on Thursday that unlike other years, there was not the volume of wool held in reserve on farm or in store to flood the market and flatten prices when they went up like they had in the past two weeks.

Two “exceptional years” of wool prices had cleared reserve stocks out, Mr Burkett said.

Northam woolgrower Anthony Haddrill, Brook Farm, who watched 47 bales of his 19-22 micron wool sell to strong bidding on Thursday, was extremely pleased with his prices.

“They were 100 up (100c/kg above his broker’s estimate) on everything.

“I haven’t seen better prices since I came back on the farm, and that was in 1994,” he said.

“It’s a pretty good year for us with wool and our crops (wheat, oats, barley and lupins) – they’re looking a bit above average now after the rain,” Mr Haddrill said.

His family has been on the property since 1886 and he runs 1100 Merino ewes.

Mr Haddrill said the decision to bring his main shearing forward to mid July to get wool to market ahead of the spring flush had paid off.

While boosting crops, he said the recent rains had also disrupted his plans to shear lambs this week to take advantage of the top prices.

Westcoast Wools’ auctioneer Danny Ryan was one of several brokers who indicated a change in Chinese woollen mills’ usual ‘hand-to-mouth’ buying patterns – possibly driven by concerns about supply – was behind demand outstripping supply and pushing prices higher.

“I think it’s the Chinese government,” Mr Ryan said, indicating he believed it had relaxed its hold on its wool buyers’ purse strings.

Chinese woollen mills supplier Seatech Industrial was the biggest buyer both days last week at the WWC, taking 14.5pc and 17.7pc of the offerings, according to AWEX.

An Australian private company formed last October, Seatech is understood to have taken over wool buying from Chinatex Australia for the State-controlled Chinatex Corporation textiles, grains and oils giant.

Another Chinese mill supplier Kathaytex Australia was the second biggest buyer on Wednesday but Europe and Japan supplier Lempriere was second on Thursday.

Some brokers also attributed the strong competition for wool in part to an extra buyer in the WWC auction room last week.

Australian Merino Exports (AME) Pty Ltd managing director Chris Kelly, who normally buys at the Melbourne Wool Centre, took a seat at the back of the WWC room both sale days last week.

Mr Kelly, who is also on the board of the adjacent Australian Wool Testing Authority (AWTA) in Bibra Lake, was in Perth for an AWTA board meeting Friday.

Through Mr Kelly AME bought 7.9pc of Wednesday’s WWC offering and 10.6pc of Thursday’s offering in what he described as “a fairly solid market”.

And there are signs it may remain “a fairly solid” sellers’ market for some weeks to come.

Widespread rains across the State have thrown spring shearing schedules into chaos and delayed the expected flow of new-season wool onto the market to ease supply pressures.

Elders’ district wool manager for the upper Great Southern and South West region, Tim Burgess, said woolgrowers and shearing contractors in his region in particular had been held up by the weather.

“Some of them are supposed to be doing their main shearing right now but they’ve only been able to get a day in here and there due to the rain and wet sheep,” Mr Burgess said.

No sales are scheduled at the WWC this week because of the Australian Wool Industries Secretariate Wool Week 2017 annual meetings and industry dinner in Melbourne yesterday and today.

This will also not help buyers maintain a steady flow of wool in the supply pipelines to processors.

At week eight of the wool season, there have only been auctions at the WWC on four of those weeks, which might have some bearing on the perceived recent change in Chinese mills’ attitude to stockpiling supplies.

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