Prices reflect jump in bale demand

Prices reflect jump in bale demand

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Wool buyers were required to wear masks in the sale room at the Western Wool Centre last week. Here Westcoast Wool and Livestock auctioneer Danny Burkett (standing, left) discusses a lot with Tianyu Wool's Dave Cox during a break between oddments and fleece auctions.

Wool buyers were required to wear masks in the sale room at the Western Wool Centre last week. Here Westcoast Wool and Livestock auctioneer Danny Burkett (standing, left) discusses a lot with Tianyu Wool's Dave Cox during a break between oddments and fleece auctions.

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Prices reflect jump in bale demand

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WOOL buyers at the Western Wool Centre (WWC) have contracts to fill and rising prices last week reflected that increased demand.

Focus was definitely on fine wools, with the WWC's 18 micron price guide setting a new high point for the past 12 months of 1955 cents per kilogram greasy on the first trading day last week, according to Australian Wool Exchange (AWEX).

On the second day it was the turn of the 18.5 micron guide to set a new 12-month high, with its new benchmark now 1799c/kg.

The 19-21 micron price guides added between 51c and 61c for the week and are all now creeping towards their top price for 12 months.

Although the 20 and 21 micron guides are still 49c and 39c shy respectively of that mark and gaining favour with buyers much more slowly than their finer counterparts, both are now much closer to their top price then to their average price over the past 12 months.

Merino cardings, where prices in recent times has sometimes moved in the opposite direction to fleece prices, added 9c for the week to finish at 931c/kg - cardings' highest price since the end of January when they hit their top of 952c/kg for a year.

The Western Indicator (WI), as a measure of local market strength, added 46c to finish the week at 1375c/kg - only the second time so far this season it has reached that level, according to AWEX statistics.

For comparison, the benchmark Eastern Market Indicator added 30c for the week to finish at 1342c/kg.

After coming off a low of 895c/kg on September 2 last year, the WI first hit 1375c/kg on March 10 and peaked for the season so far at 1376c/kg the next day.

Since then the local wool market has bobbed along, up one week then down, but not by quite as much, the next, before taking off on last week's charge.

As a further measure of demand, the passed-in rate on the first day last week was just 3.7 per cent - with no skirting lots and only 1.8pc of oddment lots rejected by buyers - and 8.9pc on the second day.

The market's move also ignored an unusually large 10,356-bale WWC offering last week - only the fourth time this season the weekly offering has been more than 10,000 bales.

The national offering of 47,446 bales was also large - up 7044 bales on the previous week - so buyers had a diversity of types and quality to choose from in Merino fleece, skirtings and oddments.

But demand did not extend to crossbreed's wools which remain difficult to sell.

For weeks there has been broker talk at the WWC of the Chinese government ordering new winter uniforms - civilian uniforms, not military as the "drums of war are beating" ANZAC Day message to Home Affairs Department staff might have inferred.

It was assumed this would result in new orders for wool.

Whether orders for wool for Chinese uniforms have eventuated is not clear - buyers are reluctant to discuss commercial in-confidence orders and may not know what products the wool they buy is destined for.

But it was clear from sale room activity last week buyers had orders to fill and scuttlebutt which suggested they would fill 'two and a half boxes' - two 12 metre (40 feet) shipping containers and one six metre container - seemed well short of the mark.

Veteran wool buyer Alan Brown, who buys for Chinese-controlled, Sydney-based exporter Milewa Pty Ltd, confirmed there were indeed "some orders about".

Mr Brown was the most noticeable of the fleece buyers at the WWC to bid up to secure the wool he wanted.

He appeared to be buying fleece in three distinct market segments, 17.5-18.5 micron, 19 micron and 21 micron, with a fuller length seemingly preferred.

For a long while on the first trading day Milewa - a relatively small operation which, through Mr Brown at the WWC and another buyer at the Melbourne selling centre, usually only buys fleece wool and holds 14th place on AWEX's national wool buyer list this season, topped the WWC fleece buyer list.

Eventually Milewa was overtaken by WA's largest independent trader PJ Morris Wool and Australia's largest wool trader Techwool Trading, but only after skirtings and oddments purchases were added to the total.

Taking 14pc of the fleece offering on the first day and 10.3pc of the fleece offering on the second day, Mr Brown pushed Milewa into third place overall behind Morris and Techwool on the WWC's weekly buyer list last week.

Other buyers were less noticeable, but similarly active.

Westcoast Wool & Livestock auctioneer Danny Burkett, who sold the last oddments catalogue and first fleece catalogue of the respective morning and afternoon sessions on the first trading day last week at the WWC, was very positive about the market's strength.

"It was a very strong market, in particular the fine weaners (wool) - the finer you go the stronger the market," Mr Burkett said.

"The fine wools are certainly leading the market - they are charging at the moment and it's the simple rule of thumb, the finer they are the stronger it is.

"There's strong competition across the board.

"It's great to see everybody in having a dab and those who miss out are straight back in, so it shows there is some strength in the market at the moment."

On the requirement for masks to be worn by buyers calling bids at last week's open cry auctions, Mr Burkett said that had not caused a problem for him.

"It's not too bad for the experienced auctioneers because we can pick up the voices, but those less experienced would find it difficult because you can't see the lips moving," he said.

At WWC sales auctioneers rely on recognising voices and the location in the sale room the voices come from - buyers sit in the same seats each auction - to identify who is bidding and what the bids are.

By the end of trading last week there were signs some of the demand for finer wools was beginning to influence 19 and 19.5 micron wool prices.

Brokers said they were hoping the increased demand would continue for at least several more weeks and by then be dragging prices for 20 and 21 micron wools higher, because most brokers are holding stockpiles of those broader wools.

Sea container availability and cost and shipping delays and cost continue to plague the local wool industry, but larger traders have overcome the problems to a degree by booking containers and deck space on container ships months in advance.

However, smaller exporters are having difficulty moving wool offshore within a timeline determined by the duration of their lines of credit.

Some are having to negotiate extensions to lines of credit to accommodate shipping delays.

This week's offering at the WWC is listed to shrink by 1103 bales, back to 9253.

The national offering however is listed to grow by 799 bales to 48,245 with the Melbourne centre returning to trading two-days a week like the WWC and Sydney selling centre.

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