Market has a positive bounce
While last week the MPG indicators across the board were showing negative, this week it was a “sea of green”. The market performed strongly on a small offering. From the open in Sydney & Melbourne, through to the final sales in Fremantle on Wednesday, it was obvious that buyer sentiment had improved.
The Eastern Market Indicator (EMI) lifted 15¢ or just over 1% this week to close at 1,170¢. The Australian dollar was also up almost a full cent to US$0.664, which elevated the EMI in USD terms by 21¢ to 777¢. The Western Market Indicator also posted a good gain, up by 25¢, fully regaining last weeks fall to close at 1,239¢.
Turnover this week was lower at $22.24 million as a result of the smaller offering. This moved the average bale value to $1,282 per bale, taking the season to date value to $1,878 million.
The pass-in rate was lower at 7.9%, 4.7% below last weeks level after growers withdrew 11.2% of the offered bales pre-sale. This resulted in 17,343 bales clearing, just over 1,000 fewer than last week.
Apparel fibre prices peaked in mid-2018 and then began a cyclical downturn. By late 2019 the average Merino micron price was down by 29-30% in both AUD and USD terms, a modest down cycle over 18 months. Then came the pandemic.
As Andrew Woods wrote on Mecardo, “Since January the price of Merino wool has fallen by 27% in US dollar terms and 23% in Australian dollar terms (monthly averages). The pandemic downturn is a separate and additional downturn to the already existing down cycle from 2018.”
The gains this week in the market were “across the board” with all MPG’s rising, however, notable rises were in the 18 to 21 MPG range with 20 to 30 cent gains. Fremantle followed the eastern states lead on Tuesday with 29 – 38 cent gains across its micron range, as well as a 37-cent lift in the Cardings.
A small offering of Crossbred wool came forward and met solid competition, with the strongest rises coming in the 26.0 to 28.0 MPG range. Cardings followed the combing wool lead, with 20, 16 & 37 rises in Sydney, Melbourne & Fremantle respectively.
The week ahead
Next week’s national offering is reduced again to 17,136 bales with only Sydney & Melbourne selling on Tuesday & Wednesday.
Better buyer sentiment and a reduced offering should provide support to the market.
