Biggest offering in three years to test prices, bidding

The wool market had a big rise last week, but it will be put to the test this week with a huge 60,000 bale offering.

A big offering of close to 60,000 bales of wool is expected to test last week’s price spike.

After a stellar start to the auctions last week due partly to currency movements, prices started to settle by the final sales but there were overall gains at Melbourne, Sydney and Fremantle fixtures.

But there are concerns the lift could be short lived, as China’s bidding remains unpredictable.

Fox and Lillie brokerage manager Eamon Timms said it was likely the Eastern Market Indicator would come back at this week’s sales.

“There is the likelihood that the EMI will not slip as far as it climbed, so hopefully there will be a net gain by the end of this week,” Mr Timms said.

“The 58,000 rostered quantity announced last Wednesday is a factor nominated by some as a reason the Chinese backed away (from buying late last week).”

Mr Timms said reaction to this week’s big offering – the largest to hit the market in three years – was universally that prices would “take a step down in line with the activity and much lower bid pries from China at the end of last week”.

Those that did sell last week were rewarded, with the best lift for 23-micron wool, which rose 89c/kg to 1364c/kg with the remainder of Merino fleece lines up 43-78c/kg.

The benchmark EMI rose 3 per cent or 42ckg to close out the week at 1400c/kg, with just 4.9 per cent passed in of the more than 49,000 bales offered.

In its analysis of the market, Australian Wool Innovation said heavy inquiry from all wool destinations was converted into new business.

Auction activity was consistently strong with just the slightest of pullback apparent at the close of selling at the stand-alone Melbourne sale on Thursday,” the analysis said.

“To say a dearer market was expected pre-sale would be an understatement.

“All buyers expected the market was set to rise considerably given the change to sentiment and the new business conditions permitting such a rise to be accommodated.

“The $A dropped by 2 per cent at the start of the selling and this just accentuated expectations and the subsequent wool value gains.”

Competition for the offering was from the subcontinent and European buyers.

“Italian competition and purchasing was “back to normal” as they were practically unbeatable on all those better wools,” the analysis said.

And with close to 60,000 bales rostered to be sold this week, wool growers will be watching the market carefully.