Wool market softens as EMI sheds 81c for the week

Wool prices go into reverse as market loses most of last week's big gains

Sheep
WOOL DIP: The wool market has hit reverse gear again after making healthy gains last week.

WOOL DIP: The wool market has hit reverse gear again after making healthy gains last week.

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Demand at wool auctions weakened this week as the market lost most of last week's big gains

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Australia's volatile auction wool market took a nosedive this week with the Eastern Market Indicator shedding 81 cents to finish at 1138c a kilogram clean.

Most of the damage was done on the first day of selling on Tuesday when the EMI dipped a disappointing 71c in contrast to last week when the indicator climbed 102c.

Some real confidence was restored to the ailing market on Tuesday last week when the EMI shot up by 123c, the second largest daily rise for the indicator.

But the buoyant mood started to fizzle the next day and that downward drift continued this week although the EMI only lost 10c on Wednesday.

AWEX said the cooling in demand on the second day of last week's sales had prompted many sellers to withdraw their wool from sale which resulted in a two-day offering of 37,432 bales.

The individual Micron Price Guides (MPGs) in all three selling centres lost between 51 and 111c on the first day.

Demand settled on the second day which resulted in only minimal price movements.

And in a positive sign for next week, the Fremantle fleece market recorded price rises to end the week after vendors withdrew 26pc of the offering.

As a result the Western MPGs rose by 9 to 21c which gave them the lowest overall losses for the week.

Fremantle's Western Indicator dipped by only 38c this week to 1181c compared with an 88c fall in Sydney's Northern Indicator to 1190c while Melbourne's Southern Indicator sank by 78c to 1104c.

Executive director of the National Council of Wool Selling Brokers of Australia Chris Wilcox said this week's price slide had come on the back of an initial wool offering of 43,450 bales, the largest since March, and a stronger Australian dollar against the US greenback.

Mr Wilcox said in the end 37,432 bales were offered because of late withdrawals and while prices steadied on Wednesday, the pass-in rate soared to 26pc.

"The weak demand wasn't the only cause of frustration this week. For the second time this year the industry experienced frustration on the IT front with the industry's EDI network going down on Monday afternoon," Mr Wilcox said.

"This was caused by a communications infrastructure breakdown in the suburb where the Australian Wool Testing Authority, which runs the EDI network, has its head office and raw wool laboratory.

"Despite delays by Telstra in addressing and fixing the infrastructure problems, the EDI network was back up and running by Wednesday afternoon thanks to the efforts and urgency of the AWTA IT team.

"It was a great relief to all that we did not suffer a repeat of February when a cyber attack on Talman caused auctions to be cancelled in week 35."

Meanwhile, crossbred wool prices thudded back to earth after enjoying a bumper time last week. The MPGs for 26 to 32 microns dropped by 36 to 80c.

Due to the public holiday in Melbourne next Tuesday, wool sales have been shifted to Wednesday and Thursday.

There are now 36,666 bales rostered for sale in Melbourne, Fremantle and Sydney which is a designated superfine sale.

Wool auction revenue has reached $482.63 million so far this selling season.

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