AWEX stats say Western Wool Centre tracking for 16 per cent increase

By Mal Gill
March 16 2022 - 4:00am
AWN State wool manager Greg Tilbrook said the wool market was as good as we have seen it in over the past few years.

WITH two thirds of the current wool selling season gone, Australian Wool Exchange (AWEX) statistics confirm gross returns from live wool auctions are on target to achieve a predicted annual 16 per cent increase.

At the Western Wool Centre (WWC), there are 14 trading weeks left, including this week, out of a 43-week live auction selling season.

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At AWEX Melbourne and Sydney selling centres there are 16 trading weeks left out of a 46-week season.

So far this season, according to AWEX, national live wool auctions have generated a gross return of $1.744 billion, with about 92pc of that export earnings coming from four countries - China, India, the Czech Republic and Italy.

If demand for wool and wool prices remain on trend with the first two thirds of this season, AWEX live auctions across the whole season - given that November-February are usually months with most demand and best prices - should generate up to $2.619b.

This would be a 16pc increase on the $2.246b AWEX live auctions generated last season.

Last month national commodity forecaster ABARES predicted the benchmark Eastern Market Indicator (EMI) will rise to an average of 1390 cents per kilogram clean by the June 30 season end - a 16pc lift compared to 2020-21.

ABARES also predicted the EMI would continue rising in 2022-23 to 1663c/kg, a rise of 19pc, driven partly by ongoing demand for fine and superfine wool for apparel production.

This week AWN State wool manager Greg Tilbrook said he believed the current "underlying strength" of the wool market was "as good as we have seen it in the past few years".

There were a number of factors which ordinarily might cause the wool market to contract due to uncertainty, but the market seemed prepared to work around them at this point, as it recovered from global impacts of COVID-19 on retail markets, Mr Tilbrook pointed out.

While war no longer caused a surge in demand for wool to make military uniforms, like it once did, it could still affect the wool market by impacting on currency values, he pointed out.

The conflict between Russia and Ukraine was causing financial market volatility which made it difficult for international traders to operate with any certainty, he said.

"When currency movements are very volatile, like they are at the moment, traders who are exposed aren't prepared to take a long position," Mr Tilbrook said.

"The (wool) market might only be hand-to-mouth at the moment, with traders just filling orders as quickly as they can when they get them, but the market continues to be strong, which is a good sign.

"There's also a shortage of shipping containers and difficulty finding space for them on ships, but the exporters are working through that.

"The underlying demand for wool is as strong as it has been since before COVID," he said.

Seemingly to prove Mr Tilbrook's point, WWC and national wool prices gained ground last week, despite larger offerings which exceeded volume levels buyers had previously seemed unwilling to accommodate.

The Western Market Indicator finished the week at 1457c/kg, an increase of 13c, compared to the EMI which added 6c to finish at 1413c/kg.

All of the WWC's Merino fleece micron price guides and the Merino cardings guide went with the flow, with increases ranging from 19c (19 micron to 1692c/kg) to 10c (21 micron to 1316c/kg) for the week.

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Some woolgrowers obviously thought they might do even better, with an overall WWC passed-in rate of 14.8pc, compared to 7.1pc in Melbourne where weekly price increases trailed those at the WWC.

National trader Techwool Trading, local trader PJ Morris and Chinese indent company Tianyu Wool topped the WWC buyers' list in that order both trading days last week.

This week the WWC's projected offering is set come back 1340 bales to 9718, while the national offering is set to shrink by 887 bales to 48,544.

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