MOVEMENTS both up and down totalling 512 cents by the Western Indicator (WI) in a month have demonstrated predicted volatility in the Western Australian wool market.
At the start of trading at the Western Wool Centre (WWC) on Wednesday, September 11, at the WI, a guide to the general strength of the WA wool market, sat at 1383c per kilogram clean.
By the end of trading on Thursday last week the WI was 1653c/kg, a welcome rise of 270c/kg across a month.
But Australian Wool Exchange (AWEX) figures show that in achieving that rise the WI dropped a total of 121c and rose a total of 391c over 10 trading days.
A comparison with the WI's movements over 10 trading days during the same period of a month last year shows the volatility predictions by brokers returning from last month's Nanjing Wool Markets Conference were on the money.
Between September 12 and October 11 last year the WI eased 85c, from 2255 to 2170c/kg according to AWEX statistics, as the wool market backed away from record prices paid for 17.5, 18 and 18.5 micron wools - records that still stand.
Even in that highly-charged atmosphere of record prices, the WI only dropped a total of 152c and rose a total of 67c across the 10 trading days - a total movement of 219c and significantly less than half the volatility demonstrated by the WI in the past month without a micron indicator being within cooee of a record.
AWEX technical controller at the WWC Andrew Rickwood has been keeping track of recent price movements as a guide to market volatility.
"I don't know how (wool) traders can continue to operate with this level of volatility in the market place," Mr Rickwood said last week.
Volatility was also obviously causing difficulties for brokers advising woolgrowers on when to put their clips up for auction.
Mr Rickwood noted in his market report for Wednesday last week that woolgrowers pulled 37 per cent of the fleece offering before the first bid at the WWC, despite news of price increases "filtering through" from Melbourne and Sydney auction centres trading three hours ahead of the WWC because of daylight saving in some eastern States.
Prices across the micron spread subsequently jumped between 39 and 59c/kg that day, with brokers later speculating some woolgrowers may rue their decision to pull their wool.
Over the two days last week at the WWC almost a quarter of the fleece offering was withdrawn prior to sale, leaving 4475 bales for auction, more than 1000 fewer than was offered the previous week.
The result was the fleece passed-in rate dropped from 48.5pc the previous week to 13.5pc last week.
Fleece prices firmed across the board between 45 and 78c with the finer microns recording the biggest gains, but Merino cardings found their new limit and retracted 27c to finish the week at 1027c/kg.
The topsy-turvy national wool market took an upward spurt last week with the Eastern Market Indicator climbing 32 cents a kilogram clean to finish at 1543c.
Wool earnings so far this season passed the $500 million mark on an offering of 28,149 bales in Sydney, Melbourne and Fremantle, but trail last season's earnings for the same period by almost $470m.
Last week's national pass-in rate was 7.6 per cent.
Many veteran wool traders have told AWEX they have never seen such volatility in the market caused in large part by the ongoing trade war between China and the United States,
The EMI has been on a roller coaster ride during the past 10 weeks moving a total 763c during the period in both positive and negative directions, AWEX said.
Dr Peter Morgan from the Australian Wool Industries Secretariat said the feeling among wool exporters last week was more positive.
China was the dominant buyer with support from European and Indian mills.
Buyers were focused on wool 18.5 micron and coarser with prices jumping by 28 to 47c on the first selling day.
The second selling day saw a consolidation of the gains, adding small increases to those of the previous day.
More than 40,056 bales are rostered for sale this week with the Sydney sale being a designated Australian Superfine sale.
Robert Herrmann from market analysts, Mecardo, said the hefty fluctuations in auction wool prices were causing headaches for growers, exporters and processors alike.
"It is hard to imagine anyone is pleased with the recent volatility and it must be damaging the wool markets reputation internationally," he wrote in a market update.
AWEX figures show that 85,494 fewer bales have been offered this season compared with last year, a drop of 19.1pc.
The national pass-in rate has been 18.4pc, a rise of 10.6pc compared with the same period in the 2018-19 selling season.
