Wool volumes to be down again this week

Wool volumes to be down again this week

Wool
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"There's a little bit of business about, but the volumes required is reduced."

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LOW wool volumes will see the Western Wool Centre (WWC) continue with only one auction day again this week.

For the second week in a row, the WWC will join the Australian Wool Exchange (AWEX) Sydney selling centre in offering wool only one day - they will reverse trading days to last week - so the Melbourne centre, the only one still selling wool two days a week, does not trade alone either day.

At this stage, the WWC is set to offer 5457 bales for auction this week, 1111 more than actually went to auction last week.

Similarly, the national offering is proposed to increase by 1586 bales from last week, to 25,338 bales.

Last week's national offering was originally projected early at 26,924 bales, but 11.8pc of the offering was withdrawn by sellers before live auctions started.

The last time the national weekly withdrawal rate prior to auction was back at 11pc was at the end of March.

Through April it generally ranged between 15pc and 17pc - except for week 41, the second week in April, when it topped out at 24.7pc.

Western Australian woolgrowers last week, week 45, continued to lead national resistance to downward pressure on prices, by withdrawing wool from sale when they do not think the likely return will cover the time, effort and value they put on growing it.

At the WWC, 16.4pc of the fleece wool initially lotted for last week's one-day sale was withdrawn prior, compared to 14pc in Sydney and just 10.8pc withdrawn ahead of the two sale days in Melbourne.

In the past month weekly fleece withdrawal-prior-to-sale rates at the WWC have ranged from 15.9pc to 29.4pc (week 41).

A lack of buyer interest from a month ago - blamed by buyers at the time on potential flow-on effects of COVID-19 on global markets for China's finished wool products and the closure of Italy's and India's borders - has now generally been matched by a lack of seller interest at current prices.

Anecdotal evidence from brokers suggests that at the prices on offer last week, woolgrowers were prepared to leave their wool in the shed until the market improved.

This close to the June 30 end of the season, woolgrowers who have not needed to sell their clip to maintain cash-flow so far, would probably prefer to carry their wool through into the new financial year because of tax advantages to not having wool sales revenue added to other incomes this financial year, brokers pointed out.

Also, those that have cropping enterprises are flat out completing sowing while there is ample moisture from the season break to give them a good start - so having to leave the seeder rig parked in a paddock to go and load wool on a truck to send to Perth for low prices is low priority right now, brokers added.

Westcoast Wool & Livestock auctioneer Danny Ryan agreed there was likely to be little change in the market in the eight scheduled auction days remaining this season at the WWC.

"There's a little bit of business about, but the volumes required is reduced," Mr Ryan said.

"It's very early days (of COVID-19 international restrictions on business and travel being gradually lifted), but hopefully the European companies coming back on line will help lift demand at the top end.

"But it will be baby steps initially."

Mr Ryan agreed that against a backdrop of Australia's main customer, China, being upset with calls for an international investigation into the cause and spread from Wuhan of COVID-19 and threatening to impose tariffs on Australian barley amid accusations of dumping, the wool market remained "fragile".

But many sheep farmers had already benefitted from high prices at saleyards and their returns from cull stock sales were "over budget", he pointed out.

Last week, the Western Indicator slid 64 cents to finish at 1246 cents per kilogram clean after the one-day auction.

WWC indicative price falls ranged from 31c (18 micron wools) to 87c (21 micron wools).

At 1444c/kg, 1385c/kg and 1333c/kg respectively, WWC indicative prices for 18, 18.5 and 19 micron wools trailed Melbourne and Sydney prices for the equivalent micron wools by at least 25c, 52c and 20c by the end of last week.

But at 1323c/kg, 1309c/kg and 1291c/kg for 19.5, 20 and 21 micron wools, WWC prices were at least 3c, 10c and 5c ahead of the equivalent Melbourne and Sydney prices.

The WWC price for cardings wool of 834c/kg was still 22c ahead of Melbourne and 38c ahead of Sydney, despite sliding 27c last week.

Buyers rejected 19.1pc of the fleece wool and the overall WWC passed-in rate was 18.8pc.

Fremantle trader PJ Morris headed the WWC buyers list last week with 725 bales or 20.5pc - topped up with 168 bales purchased in Sydney and 683 bales in Melbourne for a 1576-bale total, PJ Morris was fifth biggest national wool buyer last week.

National trader Techwool Trading was second on the WWC buyers list with 700 bales or 19.8pc and topped the national weekly buyers list - as it has done for most of the season - with 2784 bales across the three AWEX centres.

Chinese indent buyer Tianyu Wool was third on the WWC buyers list with 368 bales or 10.4pc and nationally was second biggest buyer with a total of 2020 bales.

So far this season PJ Morris has been by far the biggest WA-based wool buyer, with 68,360 bales or 6.3pc of the national wool clip purchased for sixth place overall on the national buyers list.

Techwool Trading has taken 14.8pc of the national clip so far - 161,524 bales - for top spot on the list, well ahead of Fox & Lillie with 8.9pc - 97,181 bales - in second place.

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