WOOL prices have lost the gains of the previous week and then some, as the Eastern Market Indicator dropped below 2000 cents a kilogram.
An extra 4000 bales were offered last week but only the same number sold as the week prior with a pass in rate of 19.4pc. Several price indicators fell more than 100c/kg, forcing the EMI to close on 1970c/kg.
This was right across all selling centres and types, with the 17 micron indicator losing 114c/kg in the north, and Merino Cardings dipping 106c/kg in the south.
Quality, heavily impacted by the drought, is playing a role in the varying demand, and Landmark’s weekly market report quoted an “oversupply of low strength and high midbreak lots were heavily discounted by the trade”.
Finer microns again felt the downward pressure the most, with 19m and finer indicators for all three selling centres falling between 57c/kg and 123c/kg.
Australian Wool Innovation’s market update highlights the dry season’s impact on pushing down fibre diameter as a key factor in falling prices.
“This (last) week the Sydney market in the Merino fleece room offered an average of 17.6m compared to 18.5m offered at the same sale last year, while Melbourne offered 19.2m compared to 20.1m last season and Fremantle 19.2m this year as opposed to the 19.5m of last season,” AWI said.
“The Australian Wool Testing Authority key test data revealed for the first quarter of the season, that despite the 11.4 per cent overall fall in total volume of Australian wool tested, there was 70.6pc more wool tested that is finer than 16.5m, 18.6pc more wool tested between 16.6 and 17.5m and 9.1pc more wool tested in the 17.6 to 18.5m range.”
Australian Wool Network Victorian manager Kelvin Shelley said despite losing more than half the previous week’s 50-100c/kg gains last week, there was still plenty of upside in the market.
“Most of the information we are receiving is the Chinese were short on finance and cashflow is an issue at the moment. We have seen (this) before and it does turn around, but can take three to four weeks,” Mr Shelley said.
He said the volume of wool going forward, which was well below the historical levels of this time of year, would help support a firm price level.
“Last year it took until October to get spring flush, we are nearly out of October and doesn’t look like that flush is coming,” he said.
“The worse thing is going to be next year with volume – through the western districts we have seen a number of clients call to see if they can access young wethers, and any older ewes they can possibly get a lamb out of and turn around, but that is the only area we have seen that. Everywhere else is extremely tight, trying to look after what they have got but selling off older ewes and older wethers, and even some younger wethers.
“And the majority of abattoirs are running at two to three weeks before you can get in, because they have stock coming from interstate.”
The high pass in rate last week – 19.4pc – would send a good signal to Australian markets, Mr Shelley said.
“I am hoping it makes them realise that Aussie farmers aren’t going to give in, not going to give wool away when it has been at a (price) level, because the season has been too tight, they cant afford to when buying hay and grain at record levels, so they are happy to sit on it for a couple of months,” he said.