Sliding prices deliver selling resistance

Sliding prices deliver selling resistance

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A forecast 40,999-bale national wool auctions offering failed to eventuate last week, but for the Western Australian wool market the damage had already been done.

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 Australian Wool Exchange technical controller Andrew Rickwood.

Australian Wool Exchange technical controller Andrew Rickwood.

A FORECAST 40,999-bale national wool auctions offering failed to eventuate last week, but for the Western Australian wool market the damage had already been done.

Trading at the Western Wool Centre (WWC) last week was marked by 35.4 per cent of the 2377-bale fleece offering being passed in on Wednesday, according to Australian Wool Exchange (AWEX).

Then the market deteriorated further on Thursday with 58.3pc of that day's 3174-bale fleece offering passed in.

Both passed-in rates were after 18.3pc of the projected fleece offering was withdrawn before Wednesday's auction and 24.9pc was withdrawn prior to Thursday's auction.

AWEX technical controller at the WWC, Andrew Rickwood, in his market report noted "firm seller resistance" to sliding prices by woolgrowers who had not already pulled their wool out and were not prepared to accept less than what they wanted for it under the circumstances.

While withdrawn and passed-in rates where high in Melbourne and Sydney last week, they were significantly higher at the WWC despite indicative price reductions in each fleece micron segment being smaller at the WWC than at either the Melbourne or Sydney auction centres.

Added to woolgrower intransigence on price was a lack of buyer interest in plenty of what was offered, possible a legacy carried over from the previous week when buyers learned of AWEX's early forecast of a national offering of 40,999 bales.

As reported last week in Farm Weekly, news of the large offering stalled and then reversed what had been a firming market at the WWC the previous week.

Although the early forecast proved optimistic by 7451 bales, wool buyers had been buying up in falling markets in Melbourne and Sydney last week for two hours both days before the WWC began trading.

That left some WA buyers obviously only plugging holes in consignments mostly filled from the larger offerings over east.

Predictions coming back from last month's Nanjing Wool Markets Conference of ongoing wool market volatility also proved correct at the WWC last week.

Price indicators across the micron segments shed between 100 cents and 111 cents per kilogram clean for the week, with the 19 and 19.5 micron segments hardest hit.

The indicators finished the week between 454c (18 micron) and 409c (21 micron) below their average prices over the past 12 months and with a price spread contracting to just 58c across all micron segments, according to AWEX statistics.

The top successful bid at the WWC on Wednesday was 1355c/kg greasy (1819c/kg clean) for 17.8 micron, 91 millimetre staple length, 32N/kt staple strength fleece appraised as MF4E with 74.5pc yield.

On Thursday a top bid of 1305c/kg greasy was rejected and the highest successful bid slipped to 1285c/kg (1841 clean) for 17.7 micron, 75mm, 45N/kt MF5E fleece with 69.8pc yield.

Because of the small number of lots sold on Thursday - 2012 bales sold out of a total of 4026 offered - Mr Rickwood warned in his trading report that "all fleece quotes are nominal".

The Western Indicator finished the week down 92c to 1610c/kg, compared to the benchmark Eastern Market Indicator which fell 98c to 1511c/kg.

Merino cardings were the only exception to the sliding prices.

Cardings continued a relatively steady five-week catch-up run since Wednesday, September 24, when the indicator's opening price was 843c/kg, its lowest in at least 12 months at the WWC.

It finished last Thursday at 1054c/kg, still 53c below its average for the past 12 months but closing the gap, while the rest of the indicators were widening theirs.

Local trader PJ Morris Wools bought 30.4pc of the wool sold on Wednesday and 24.1pc on Thursday as clearly the biggest buyer at the WWC last week.

Techwool Trading was second with 19.9pc on Wednesday and 19.8pc on Thursday and another local trader Swan Wool Processors was third with 9.1pc on Wednesday and 7.8pc Thursday.

This week's WWC offering is expected to grow by 449 bales to 7748.

The national offering is estimated by AWEX to be 34,174 bales, just 626 more than was actually offered last week.

With daylight saving starting last Sunday in Victoria and New South Wales, the Melbourne and Sydney AWEX auction centres will from this week be trading three hours ahead of the WWC, with the likelihood that on most trading days during the daylight saving period the Melbourne and Sydney centres will have completed catalogues before the first bid at the WWC.

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