Post-Easter rostering a market key
Wool prices fell below year-earlier levels almost across the micron categories last week when the Eastern Market Indicator (EMI) closed at 1191 cents/kg.
National Council of Wool Selling Brokers executive director Chris Wilcox said the exception was 21- 23 micron wool where prices were at the same level as in April 2011.
"A possible reason for the weakening is that rostered offerings over the two weeks after the Easter recess are higher than previously expected," Mr Wilcox said.
However, he said March AWTA tests showed that the weight of wool tested was down by 18.6 per cent year-on-year for the month which suggested such large offerings would not be sustainable.
AWEX said the 21 cent drop in the EMI was off an offering approaching 50,000 bales, the biggest in a month.
"The market opened the week with prices taking a dip, following along the reductions of the previous week," AWEX said.
"Fremantle suffered the largest falls as buyers retreated, which triggered a 44 per cent pass-in rate on Wednesday, the highest in over three years."
Elders national wool manager Andrew Dennis said the market was following a similar pattern to last year when it fell in May, jumped a dollar in June and then resumed its downward trend until spring.
"Signals from the market are alluding to a repeat performance again this year," Mr Dennis said.
He said a degree of panic was building in some establishments in China as processors reacted to a downward trend.
"With large offerings post Easter of 56,000 bales, this pressure will intensify and prices will drift lower as traders drop prices further to clear goods," Mr Dennis said.
"Once the supply drops to 40,000 bales, prices will naturally flatten out and if orders have been sold short we could see a bounce like last year."
Mr Dennis said a couple of large Chinese firms had started purchasing greasy wool for September/October delivery.
"Obviously this is in part driven by the need to fill machinery but also helps provide a platform for the trade to work from," he said.
"If volumes can increase significantly both in terms of the amount purchased by mills overseas and the amount of wool sold forward by growers we will gradually remove some of the inherent volatility of the wool market."
Wool sales will resume next week after the one-week Easter recess.
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