Wool sales resumed this week in all 3 centres following the 3 week mid-year recess. Auctions in both Sydney and Melbourne were held over three days, while Fremantle was held over two days, with the national offering coming in close to 55,000 bales for the week.
Much of the talk over the recess was around the sharp rises in the AUD/USD cross rate since the close of sales in mid July and what impact that may have on the open. The AUD was buying 77 US cents at the close of sales but touched 81 cents during the break, settling closer to 79.5 cents at the start of sales this week.
The other main talking point was the relatively large offering forecast for this week and what impact that may have on the price.
In a sign of the strength of the current underlying demand for wool the market basically shrugged off both of these issues on Tuesday with all categories finishing the day on a slightly dearer basis in AUD terms (+1 cent) and what could only be described as a sharp jump in US terms (+34 cents).
In a change to what has been the case recently it was the crossbred end of the market that came under the most buying pressure with 28 micron and finer 10-20 cents dearer. 29 to 32 micron types were slightly dearer while the broad crossbreds were basically unchanged, or isolated cases actually cheaper.
There was a relatively large Tasmanian catalogue offered on Tuesday which came under very close scrutiny and in some cases sold to extreme levels. The fact that the wool we produce is proportionately free from fault means that it attracts strong competition from Europe, as they demand higher specs, but also from China as buyers look to “correct” their orders by including lower VM, higher strength and lower mid break lots.
The market strength continued into Wednesday when merino types were again 10-15 cents dearer.
Over the next few weeks volumes are forecast to pull back with 44,000 bales rostered for next week followed by 35,000 the week after.
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