The Australian wool auction sales adjusted heavily downwards last week (ending Thursday August 24) in stark contrast to the impressive gains of the previous week.
According to Australian Wool Innovation’s (AWI) weekly market report, following two weeks of consecutive rises and seeing the AWEX Eastern Market Indicator (EMI) go into record territory, the market finally hit a price point where the price hurt the prompt demand, and the market reacted accordingly.
By the close of selling, the EMI settled at 1572 Australian cents a kilogram clean, eliminating 42c from the record level set last week.
But, the EMI was still 20 per cent higher than at same time last year (when it was 1309c/kg clean), at the end of the eighth selling week.
According to the report Merino qualities broader than 19 micron sold 60c lower whilst the average and good top making types finer than 18.5 micron were sold to levels 30-40c cheaper.
However, strong buying from Italy ensured a different market direction on the spinners and best top making sale lots. Very few bales were allowed to go to their competition and this led to a slight escalation in prices, bucking the trend of all other wool sectors.
Contract for non-mulesed wool
According to an Elders wool manager Craig Potter, based at Ararat, there is a contract paying above market rates for non-mulesed wool.
Last Thursday, Mr Potter said ‘Growers Call’ contract was offering 300c/kg clean above the AWEX premium and discount report and AWEX acquired quotes for superfine prices.
He said the contract had been available for about two months and the amount the undisclosed European processor wanted to buy was unlimited at this stage, with the contract ongoing.
“Growers who participate will receive feedback on processing performance of the consignments and information on the product ranges made from their wool,” Mr Potter said.
He said the processor had approached Elders to acquire high-quality, non-mulesed wool from Australia. Suppliers have to have non-mulesed on their National Wool Declaration (NWD). The contract specifies micron (basically superfine) and length ranges, a staple strength minimum and a vegetable matter premium.
“In the coming few years, I expect the premium for un-mulesed wool will grow,” Mr Potter said.
He said that expectation was based on some processors, particularly Europe, gearing to buy more wool from sheep that did not undergo the practice.
“But it’s up to the processor and where they market the wool and what their customer needs.”
He said it was also important that growers were able to decide whether they mulesed or not.
