The lifting of the ban on exports from South Africa to China this week was a very good result for all concerned. It was a difficult period for the industry, particularly for those directly involved, but also the broader wool community. Whenever the normal flow of wool is compromised by external forces, uncertainty is created. Available finance has been pushed to the limit and variable market prices between the countries made trading conditions extremely difficult. The fact that the South African wool was selling at a discount to Australian prices until now, meant that the lifting of the ban must have been a strong influencing factor determining the direction of the market in Australia this week. Demand through the pipeline was already very poor. Now that the flow of wool is more transparent, we hope to see standard supply and demand factors to play out and for more confidence to return. Just 26,000 bales were eventually sold this week with 21% passed in rate. Growers backing their judgement that prices will remain stable in the medium term as supply will be very restricted. Less than 4,000 bales were sold in Fremantle with 45% of the merino fleece failing to meet grower expectations and will remain in store for another day.
AWEX Eastern Indicator compared with 10/05/2019
Change in % -3.02%
If you want to learn more about AWEX indicators, visit the official website http://www.awex.com.au
Schneider Indicators compared with 10/05/2019
Change in %: -5.24%
Change in %: -2.59%
Change in %: -2.67%
↓ 18 Micron
Change in %: -2.51%
Change in %: -2.22%
Each indicator is expressed by a number representing a market quotation for a selected range of types and is not a price expression and it’s not influenced by currency fluctuations.
Wool indicators are anyway based on Australian Dollar.
If you want to learn more about SCHNEIDER indicators Click here.
The staple strength of the offering is actually quite good. According to AWEX figures, despite the drought, one third of the merino fleece offered this week was >40nkt and more than half of the merino fleece with a mid-break < than 50%. It’s the yield that is most restrictive to buyers for China in particular. The cheaper Australian dollar failed to add any support to wool prices.
Auction offering – current week
Selling Centres for week 46
Market Sale Offered Sold Passed In
North S 46 8431 7052 16.4%
South M 46 18302 15097 17.5%
West F 46 6420 3816 40.6%
Auction offering – next week
Market Sale Sale days Volume
North S 47 W-T 7100
South M 47 W-T 14032
West F 47 W 4505
If you want to see the complete Wool Sales Roster click here.