Following a dramatic dip in prices last week, the Eastern Market Indicator has recovered from its 22 cents a kilogram tumble last week to close at 1422c/kg yesterday.
Despite a fluctuating Australian dollar, the 40,000 bales offered nationally this week was met with solid competition which helped boost the EMI to US1086c/kg - a 20 per cent jump on year-ago levels.
Australian Wool Innovation Limited trade consultant Scott Carmody said resistance to the upward movement was tried by buyers, but failed dismally, as global competition ensured prices remained predominantly strong.
“Numerous factors could have conspired against the positive trajectory of the market but didn’t,” Mr Carmody said.
“(The) adverse foreign exchange rates in USD, Chinese Yuan Renminbi and Euro against the AUD, a selection that is diminishing both in volume and quality, and our major customer,China, celebrating a national week holiday for their New Year.”
The Merino sector of the market, the 18.5 micron and finer type categories, continued its domination, with some lots recording increases of over 60c/kg.
The crossbred section of the market continued to waver in comparison to the merino sector, with market analysts recording losses from 5-20c/kg, with 32m the most affected.
“We came back from the recess with a lot of business booked from processors in China, India and Europe – on the back of a lower dollar which dropped to US71-72c,” Elders southern wool sale manager Lachie Brown said.
“That business was required in the first weeks back and with the lower supply year-on-year, the market squeeze was considerably higher.
“What we saw last week was the exchange rate lift to US76c which put downward pressure on prices in Australian dollar terms.”
Mr Brown said this week’s market had “consolidation”, with no substantial rises or falls, and stable overall gains.
The result were price increases across the entire merino micron range, which he said, after a 22c/kg fall in the EMI benchmark the previous week was a sound result.
Next week nearly 46,000 bales will be offered in Sydney, Melbourne and Fremantle.
The Sydney sale has been designated as a superfine sale which is forecast to be met with significant demand.
“There is a real trade processors around the lack of finer wool supply,” Mr Brown said.
“One the back of the better season and a shift out of fine wool growing in higher rainfall areas, we are seeing supply of 19m and finer well down year-on-year.
“Consequently the premium for those wools has risen to their highest levels since early 2011.”