Scramble to sell only short
BEFORE Easter the wool market softened leading into the one-week recess.
This easing encouraged wool to be rushed into market during that week as growers and brokers tried to capture some of the recent record prices.
Unfortunately, this is a regular occurrence. When we see the slightest blip in a bull market, we tend to scramble over one another to get wool sold.
The result? The largest weekly offering of the selling season to date – a staggering 25 per cent increase in volume from what had been originally forecast only a few weeks ago.
The Australian Wool Exchange volume forecast is very widely distributed so our major wool-consuming customers jumped on this information and tried to use it to “talk” the market down.
And yes, the market was a bit cheaper when Melbourne sold in isolation on Tuesday, to the tune of 20c/kg to 50c/kg, according to AWEX.
Reports from the room stated that the better, low-fault wools were the least affected.
The positive thing is that the market stabilised the next day with most descriptions firming slightly. Crossbred wools were in fact dearer on Wednesday, up 20c/kg.
As some examples of the micron categories from the close on Wednesday, 16.5-micron wools were at 2943c/kg, with good types making north of 3000c/kg clean, while 18.5micron types were at 2133c/kg and 28.0 lots at 894c/kg.
For the Merinos this is still great money, with all hovering around the 95th decile of the past 5 years – if you go back 10 years they are closer to the 99th – and it will take a few more weeks of losses before we should consider this a genuine correction.
Volumes normalise again next week with around 41,000 bales forecast, 15,000 less than this week.
The selection has clearly changed so the pressure is well and truly easing on mid-break and staple strength and is now mounting on lots with high vegetable matter.
We can expect Tasmania’s better lots to continue keenly sought.
I’ll finish on an interesting stat I discovered doing today’s analysis. From 12 months ago 18 and 19 micron wools are up about 5 per cent while 22-micron types have leapt 35 per cent .
It’s good that some of the pastoral clips from the big island can have a piece of these stellar prices. to be