Steady result for wool this week.
After the volatility and interruptions of recent weeks, the wool market settled into a comfortable pattern this week with a seemingly contented balance between supply & demand at current prices.
The AU$ continues to attract focus as it jumps around on a day to day basis.
The Eastern Market Indicator (EMI) fell marginally, losing 2 cents for the week to settle at 2088 cents AU$. With the AU$ again depreciating almost 1 cent over the week, the EMI in US$ terms closed at 1,497 US cents, down 19 cents on the week. (Table 1).
News out of South Africa this week sounded remarkably similar to the local wool situation. The S.A. benchmark indicator climbed to a record 253.82 Rand, helped by a weakening currency.
After peaking at 148 million kilograms in 1966, southern African wool production has declined to about a third of that annually.
The country has about 15 million Merino sheep, with Cape Wools estimating there are as many as 9,000 commercial producers and 50,000 small-scale farmers.
Again, a relatively low pass-in rate at auctions of 4.1% for the week, resulting in a clearance to the trade of 36,927 bales passing in only 1,500 bales. This resulted in an increased dollar value for the week of $94.04 million, with a combined value of $597.0 million so far this season.
In the seven auctions held for the current selling season, the cumulative national total offering is 39,000 bales lower (-12.5%) than for the same period in 2017/18. The clearance to the trade (bales actually sold) is tracking 3,515 bales per week fewer than for the same period (Figure 2).
On the smallest national offering of crossbred wool in three years a mixed result was recorded. The Melbourne sale reported dearer for 30 MPG while cheaper for 28 MPG.
AWEX reported that Merino Cardings had only minor movements for the week and were generally unchanged.
The week ahead
Next week a smaller offering of 34,500 bales is rostered with all centres selling. With currency assisting and supply constrained we can look forward to at least a similar result as this week.