Week 01 – July 2022
AWI Commentary
The opening action of the new 2021/22 selling season at this week’s Australian wool auctions produced widespread losses for most wool values. The abnormally large supply clashed with sluggish demand. Buyers subsequently took full advantage of that situation and prices across all Merino fleece types stepped down by 40 to 60ac clean/kg as sellers generally showed little intent to protect the established levels, evidenced by the relatively light passed in rate of 14.8%.
Just a few wool types within the crossbred descriptions escaped the downward pressure. The very small offerings of the finest (26micron) and broadest (32 micron) edges of that selection posted gains of 5 to 10ac clean/kg. The mid micron (27 to 30micron) crossbred wools did fall, but very minimally at just 5ac for the week. Most of the cardings and oddment types were 10ac cheaper in the east but largely held their average values in the west.
Australia’s largest trading house stepped up and exercised their considerable buying strength to compete heavily and dominate the two largest players of the Chinese top making sector. Their strength was highlighted as that single company topped purchasing in three of the four wool type sectors. Within the Merino fleece lines alone they purchased over 20% of the offering which was over 5,000 bales for the week and upwards of a total of 8,000 bales went into their inventory, roughly estimated at over a $15 million spend.
The two big Chinese top makers also found the cheaper buy-in levels attractive and showed consistent buying interest by keenly following the market down throughout the week. As the week progressed, other Australian traders started to cautiously buy, but the usual participation from indent buyers remained quiet in percentage buying terms.
Putting the current price in perspective – for overseas based manufacturers and traders using US dollars, the average price of wool (USD EMI) is the cheapest it has been for 18 months. The previous low was January 2021 when the price of 934usc clean/kg was available to buyers when COVID-reduced pricing and consumer buying at retail hit a low point
Next week has over 61,000 bales on offer over three days, the largest sale week scheduled for quite a few years. This is followed by a three-week recess.
