Week 51: 22/06/2017 The AWEX EMI closed on 1,533c adding 27c this week at auction sales in Australia. The smallest offering for the year (22,298 bales) went under the hammer in Sydney and Melbourne with great support across the entire range of types and breeds. Interestingly enough this week’s offering was the smallest Merino fleece offering for over 8 years with Fremantle sitting out of the room this week.
The opening market saw bullish competition on the scant selection of suitable types with the WMI adding 22c on Wednesday, and whilst Thursday’s market showed a lesser result, the sentiment was still positive on the best style and measurements. Whilst the focus was on the best style and low VM lots of the offering, there was good support for the poorer style and poorer specified lots. The Merino Fleece and Skirting categories posted rises between 25 and 45c.
Crossbred’s lots were 5-10c dearer whilst the Merino Carding indicators rose between 5 and 20c. Mike Avery from Southern Aurora Wool reports “An interesting week on the forwards. Volume was moderate in a week where unprecedented spring levels where paid. Growers had to accept discounts to the spot market of 50 to 100 cents to achieve hedging levels of 1500 in August and 1450 in September. Although 3% and 6% discount seems on the face of it to be steep but in the light of current volatility, when viewed from the record high price levels, the historical data made more sense. Next week SAW expect forward prices to contract a little ahead of the spot auction. Exporters are still looking for some off shore demand signals as most mills continue a wait and see approach.”
With 36,993 bales on offer and the new season’s wool offering hope of more suitable style and low VM wool on offer, I personally agree with Michael Avery in that hedging into the spring at these levels makes great economic sense.
Next week’s offering the last for the financial year and the market continues to catalogue and offer for another two weeks before we reach the 3 week recess. What a year it’s been for the sheep and wool producers in Australia. ~ Marty Moses
Market Report 51 (PDF)