Small offering helps lift market

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Bob GarnantCountryman
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The Australian wool market finished 19.9 per cent higher last week when the US exchange rate fell by 1.3 per cent.

Australian Wool Industries Secretariat's Peter Morgan said the Eastern Market Indicator (EMI) closed at 1239 cents/kg clean or 131c/kg less than in the same week last year.

"But the season average of 1227c/kg is 190c higher than the season average at the end of week 37 last year," Dr Morgan said.

AWEX said the 41,560-bale national sale was the sixth smallest three-centre offering since the start of the season.

"The two-day market had all Merino fleece making significant gains in values," AWEX said.

Dr Morgan said the year-to-date offering was 41,557 bales fewer (2.9 per cent) than at the end of the same week last year.

"This year-to-year difference is likely to slip further in the short term as current estimates for the next three sales are all down following the heavy rain and floods in New South Wales and Victoria in March," he said.

Dr Morgan said the US exchange rate eased again in response to a variety of economic news during the week.

"Financial analysts attributed the early fall in the exchange rate to poorer trade data out of China and a later strengthening of the $US in response to better employment data in the US," he said.

"This was followed by weaker consumer confidence in Australia on Wednesday."

The National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said last week's price lift seemed to have been mainly due to the $A weakening against the $US.

"Essentially we are in a holding pattern with the EMI virtually unchanged since last October," Mr Wilcox said.

"The market has encountered week-to-week movements influenced by the ebbs and flows of offerings and the currency exchanges but no real direction has become evident."

He said wool had become cheaper for the Chinese since the country's currency, the Renminbi, had appreciated by just over 7 per cent against the $US since June 2010.

"The Renminbi may have had higher appreciation if the Chinese currency had been allowed to float," Mr Wilcox said.

Estimates of 43,371 bales are making up this week's wool sales.

Dr Morgan said the following weeks were at 40,020 and 44,500 respectively, a fall of 11 per cent on the three-sale period last year.

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