WOOL'S Eastern Market Indicator has jumped another 15 cents to close Wednesday at 947c/kg (clean), consolidating excellent gains made in the opening sales of the year last week.
After months of gradual price increases, the Australian wool market stepped up a gear in the opening sales of the year last week, as China’s manufacturers sought to secure wool supplies for their winter orders and supply concerns sent buyers into overdrive.
The AWEX EMI then lifted another 6c/kg on Tuesday following on from last week's 47c/kg gains compared to its level before the four-week break.
At Wednesday's sales in Sydney and Melbourne a further 15c/kg was added to the EMI, which now stands at 947c/kg, reflecting gains of 19c/kg in Sydney (northern indicator now stands at 974c/kg) and 12c/kg in Melbourne (southern indicator now stands at 925c/kg).
Last week's jump was it's biggest leap since September 2002 and the first time this season that all three regional indicators have broken the 900c mark.
“The understanding is that we are getting more demand from China and it is easier to book wool,” said Landmark wool manager Stephen Keys.
Mr Keys said this rise in orders spells out that the Chinese are in the process of building back their wool supply.
This, in the short term at least, should bode well for further price gains.
However with the Chinese New Year – February 14-24 – and subsequent shut down of industry coming up an easing in prices is expected.
“We expect that over this period the market will have to correct itself but overall the market is looking positive,” Mr Keys said.
Pass-in rates last week plummeted to a season low of 3.3pc nationally, and just 2.2pc at Tuesday's sale in Melbourne, as all micron sections rose 40-60c/kg despite a 3.1pc increase in the US exchange rate compared to the last sale of 2009.
The finer end of the market led the rally, with the average AWEX Micron Price guide for 16.5 microns up by 52c clean, by 62c for 17 microns, by 53c for 18 microns and by 40 c for 19.5 microns.
“The 16 micron range is now becoming more affordable to the Chinese,” Mr Keys said.
Merino cardings traded up by 42c/kg – almost 25pc higher than it sold at the start of the season.
Crossbred types also sold well, with gains across all micron ranges from 3.5pc to 44pc in 26 micron and 32 microns sections.
Mr Keys hinted that an improvement in the quality of wool coming onto the market could also assist price gains.
“There is a lot of good 72-plus yielding wool coming onto the market,” he said.
“This wool has come off areas that have had better seasons but that said there is still a lot of tender wool selling well.”
Bill Mitchell, director of Platinum Agribusiness, commented in his weekly wool report that “at this stage the normal cyclical pattern is well and truly intact and all things being equal there should be some more upside to come over the next six to 12 months.
“Nevertheless, the top of the physical market will not necessarily be the top of the forward market and in the wool market in the past it has often been best to sell forward while the former is still rising and there is plenty Wool Indicator Contract Prices Awex 19 and 21 MPG's Aus cents/kg / US cents/kg of optimism about. "
Future prices for 21 micron returned above 1000c this week.
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