Week 06: 10/08/2017

The AWEX EMI closed on 1550c at auction sales in Australia this week.

The 28c rise was largely unexpected as the recess intelligence was grappling with rise in the AUD/USD exchange rate, which has been hovering around 79 USc for the past 10 days. The other mental hurdle the intelligence was facing was the 52,353 bale offering which resulted in a three day sale in the eastern states – something we have not seen for four season in Sydney. Tuesday opened exceptionally strong and despite the EMI posting a 1c increase (+34 USc) the best style and specified lots were significantly dearer. There was also renewed interest in medium-high VM lots in the 19.5-22µ range.

As the week progressed and Fremantle sales commenced on Wednesday, it seemed that buyers were fully focused on securing wool across all categories, including the Skirtings and Crossbreds. The 26-30µ categories attracted bullish competition posting rises as high as 50c for the week. The exception to the rule was the carding sector which posted between 25-40c losses for the week in the Eastern markets and a 1c rise in the West. It was noticed that one major carding buyer was absent from participating in the market.

Michael Avery reports the irregular close to sales prior to recess coupled with a rising AUD and sluggish demand early in the break had most industry analysts prepared for a slow start to the new season. Better demand signals over the last 10 days and a steadying dollar saw forward markets lift to trade over 1500 in September prior to the auction commencement. The positive move in the spot auction saw forward price activity improve and new highs achieved out to June 2018. More importantly good volumes (72t) were traded in the spring months at levels (1505 to 1530) that would result in a hedge return for growers in excess of $2000 for their 21.0 fleece. Activity tailed off into Thursday as exporters and processors reasserted positions and risk profiles.

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