Wool market gets spring flush in autumn

Highest prices for 19.5 micron and finer wools since Australian Wool Exchange (AWEX) records started in July 1995, coupled with the aftermath of rain disrupted shearings at the end of summer, have generated unprecedented activity, particularly in the past fortnight, at WA wool stores.

The level of deliveries from woolgrowers to wool stores, brokers said, has been reminiscent of spring – usually when most wool is delivered.

Apart from the attraction of potential record prices for their clips if they get their wool to a broker and up for auction immediately, most wool growers are also racing to "clear the decks" before they start their cropping program, brokers said.

Good subsoil moisture has many growers considering the prospect of beginning their cropping program with early varieties in mid-April so they want their sheep shorn and the wool consigned and sold before then, leaving them free to concentrate on sowing.

AWEX statistics for weekly sale offerings at the Western Wool Centre (WWC) tell the story of spring, summer and a spring-like autumn.

WWC auction offerings peaked at 11,620 bales in the first week of the spring shearing season, then fluctuated between about 7500 and 9500 bales each week until the Christmas-new year three-week auction recess.

Pent up demand and continued wool deliveries over the break saw WWC auctions return to record prices and just under 12,000 bales on offer the first week back this year, followed by just over 13,000 bales offered the second week.

From there, weekly offerings returned to the normal summer pattern – albeit at an elevated level due to high prices – fluctuating with between 8000 and 10,000 bales on offer each week.

An exception was mid-February when the offering jumped to just on 12,000 bales and, mainly due to the large offering, prices which had been climbing steadily in record territory marked time for that week.

When unseasonal rains disrupted shearings at the end of summer, weekly offerings shrank to 7666 bales.

But then the combined impact of shearing teams completing the back-log of rain-disrupted shearings and a four-week run by the western wool price indicator triggered a fresh influx to wool into stores with instructions to sell it immediately.

By the second week in March the offering was back above 10,500 bales, it climbed to 12,611 last week and there's an early forecast of 12,559 to be offered this week.

So far this season the WWC has offered 34.2 million kilograms of wool for auction, an increase of 3.7mkg on the same time last season, or a 12 per cent increase according to AWEX and well above the national increase of 7.8pc.

As an indication of how little wool is left on farm or in stores, 32.4mkg of that 34.2mkg was offered for the first time, an increase of 4.4mkg or 15.7pc on the previous season's first offerings, and also well above the national average of 8.5pc.

National wool auction turnover for last week jumped $11.81m to $79.86m, the second highest weekly turnover for 2017 and since AWEX introduced the turnover statistic on its September 15 national report last year.

The $83.14m achieved in the second week back from recess was the only time turnover has been higher.

"March has turned into September this year," Westcoast Wools auctioneer Danny Ryan said.

"In the past two weeks our store recievals have been on the up.

"The rain shortened everything up, so with prices the way they are, everything is coming in at once.

"As well, everyone is trying to get their wool cleared away before seeding starts and that could be fairly early in April for canola in some areas.

"There's very little wool left on farm.

"It's going to be interesting (finding supplies of wool for auction) come May and June."

His Westcoast Wools colleague and export sales specialist John Kirkpatrick described the phenomenon as "shear and sell".

"Nobody is hanging on to wool," Mr Kirkpatrick said.

"Woolgrowers want to get it to auction and sold while prices remain high and buyers want their share of what's available because what you see being sold here (at the WWC) is their customer's stocks for next season's (northern hemisphere) winter fashions market.

"And it's not just the Chinese mills, the Italians have come back in too."

AWEX figures back up his statement.

After last week's national sales China has taken 74pc of this season's clip so far, compared to 71pc for all of 2015-16, and Italy has taken 5pc, up from 4pc last season.

India and South Korea have bought 7pc and 5pc of the national wool clip, the same as last year.

District wool manager Upper Great Southern and South West Tim Burgess said Elders' wool store staff had struggled to cope with deliveries from growers in the past fortnight.

"There's been an unprecedented level of deliveries to our store," Mr Burgess said.

It has also been a hectic time for shearing teams trying to catch up after rain delays.

"It was probably the roughest starts to a year I can remember," said Rhenice Wilkie, Wilkie Shearing, Moora, his week.

"And we've probably still got another six weeks of it in front of us."

She said while rains had disrupted shearing on some farms it was not evenly spread so teams had been able to keep working.

"We were lucky up here (Moora area), while some farms might have got 35 millimetres (of rain) which stopped shearing, the farm next door got nothing so we've been able to just swap sheds when we had to and then go back to the rain-disrupted shed when we could to finish the job.

"There's more sheep to shear this year because a lot of the farmers have hung onto their older sheep (because of high wool prices) and there's a lot of wool coming off them.

"And it's been hard work for the shearers because they are not as good shearing as they normally are – the wool has become a bit cotty (tangled) with all the rain."

The large offering and a rising Australian dollar had little affect on the price of good specification fine wools at the WWC on Wednesday last week, with buyers pushing the price of 18.5 micron wool up a further 35 cents to a record 2106c/kg clean.

Good specification 19 and 19.5 micron wools followed, rising 18 and 24c respectively to records of 1952c/kg and 1793c/kg.

The Western Indicator topped out Wednesday at a record 1557c/kg.

Based on those prices a 185kg bale of good specification 19.5 micron typical WA greasy wool was worth about $2275 – or equivalent to about $12,515 a tonne and, at that price, was one of Australia's most valuable export commodities.

On an average cut of 5.5kg across the flock each sheep carried 19.5 micron wool worth $67.65 on its back and big ewes that cut 7kg were carrying $86.10 in wool.

But by Wednesday afternoon the price of wools broader than 19.5 micron started to slip.

On Thursday, the finer microns wavered then eased as the record rush took a breather.

The 18.5 and 19 micron wools finished down 20c and 10c to 2086 and 1942c/kg, while 19.5 micron wool was hardest hit, down 33c to 1760c/kg.

Broader micron prices continued to slide.

The Western Indicator finished down 20c overall for the week at 1534c/kg, AWEX said.

While record prices were achieved on Wednesday, the highlight of last week was Elders selling a special line of 14.5 micron, 83 millimetre staple length, 70.7pc yield wool at 1717c/kg, the second highest greasy price and equivalent to 2429c, the highest clean wool price achieved so far this year at the WWC.

The highest greasy price was 1721c/kg (2358c clean) for a line of 16.5 micron, 89mm wool yielding 73pc paid the previous Thursday.