Week 19: The AWEX EMI rose 58c at auction sales in Australia this week. The EMI pushed into new price record territory, closing the week on 1681c in what can only be described as a frantic grab for wool of any type. All merino types were on the menu for exporters, with an insatiable appetite for the Week 19 offering of 43,432 bales. Prices across the merino MPG’s generally increased between 40-60c, whilst some specialty types posted rises in excess of 100c.
Despite buyers preference for best measured and style wools in the past few months, this week saw their appetite extend for lots with less flattering specifications and style which resulted in 98.7% of the offering being cleared to the trade – the lowest pass in rate for 27 months.
Skirtings posted 40-60c increases for the week with the lots with VM under 2% the key focus of the bidders. Merino Cardings continued to post unbelievable increases, possibly due to the limited offering in this sector pushing the average for the three MC indicators to 62c (4.5%) for the week. Finally, the crossbred sector emerged from an extended price slump adding 80-90c to last week’s 20c rise. The star performers 30-32µ MPG’s posted 13 and 17% weekly increases respectively.
Forward Market Report by Mike Avery: A very different week on the forwards as moment in the spot market bought buyers and sellers together. Pre-Christmas forwards traded flat to cash with 19.0 hitting 2000 cents and 21.0 1650. Growers embraced both outrights and options into the new year as levels reached the tipping point for guaranteed returns and the forward curve flattened. Pleasing activity was spread over 12 months and all microns. Growers needed to accept out of the money strikes to achieve fair value premium nevertheless they delivered solid minimum price guarantees. Volumes on the forwards increased this week but still only represent about 3% of the weekly wool flows. With most micron qualities now entrenched in the 95 plus percentile band, growers need to address their expectations. A sound hedging strategy can combine both time and price considerations and blend a use of both outrights and options when the opportunity arises. ~ Marty Moses
Wool producers are encouraged to ensure they have voted or allocated their Proxy votes for the AWI Director election to Don MacDonald or Paul Cocking and not to the Chairman or AWI. To effect the much needed accountability in the operations and governance of AWI voting for Don Paul and Collette Garnsey is strongly recommended.