Wk 28 12/01/2017. BOOM! The AWEX EMI shot to new 5 ½ year highs in the opening auction sales in Australia this week delivering a strong signal for wool in 2017.

The EMI increased by 67c (+5%) to close the week on 1,422c only 3c short of the previous EMI record set in 2011. I believe that supply concerns and solid short term demand came into play for the first sale in the new calendar year with the largest rises in the sub 19 MPG’s, which increased price between 100-155c whilst the 19.5-22 MPG’s increase between 63 and 100c.

The pre-Christmas trend of a widening basis between fine and medium categories continues to grow whilst the overall market moves upwards. Whilst the buyer competition remained widespread, the activity in the rooms was one of urgency to secure most Merino wool types. Whilst the momentum slowed down generally on the closing day of sales, the best measured and stylish lots commanded bullish competition until the last lot offered.

Merino skirtings increased between 50-100c in line with their fleece equivalents and the Merino carding indicator increased a healthy 30-40c, with all centres achieving record highs this week. Crossbreds (unfortunately) attracted little or no increase in their pre-Christmas demand levels. Whilst the 25-28 micron categories held relatively firm the 30 MPG fell another 20-37c for the week heightening the concern for future pricing in this sector.

Mike Avery reports that the forward markets traded briskly, as exporters looked to cover early autumn sales and build stocks into the new season. Buyers will be looking for some stabilisation of price at these new levels. Rapid price movements usually lead to demand strangulation. Pleasingly the rise stimulated activity into the spring with 135.5 tonne traded this week and next year delivering some historically high hedging levels.

The next weeks will test the resolve of buyers and sellers alike. We expect a volatile time ahead for both the auction and the forwards. ~ Marty Moses

Market Report (PDF)