Greasy wool prices continue to drift along, with the very fine merino categories being an exception. Prices range from depressed for crossbreds to low for broader merinos and quite high for very fine merinos. The greasy wool market is waiting for improved economic news from major economies to stimulate a rising price cycle. Western Europe, traditionally a bellwether economy for greasy wool prices, is in recession. China, the center for wool processing and a major consumer of wool, is facing economic challenges with low nominal economic growth. In the USA, there are some signs of credit growth picking up, which could reflect a pickup in economic growth. Wool prices tend to reflect the state of the major economies of the world, and when these economies start to pick up, wool prices will follow.
Sydney and Fremantle wool markets saw big improvements in both broad and merino fleece categories this week due to the lower Australian dollar. The national pass-in rate reached a seasonal low of 3.4%. The depreciation of the Aussie dollar was caused by concerns about conflict and doubts on the US's ability to enact rate cuts. The EMI in USD lost 1¢ to 743 US ¢/kg. In Sydney, 18MPG rose 29¢ to 1,539¢/kg and 20MPG improved 32¢ to 1,362¢/kg. In Melbourne, 16.5MPG improved 48¢ to 1,828¢/kg and 21MPG improved 16¢ to 1,322¢/kg. The Western Market Indicator (WMI) improved 3% week on week. RWS premiums for wool varied between 20 and 45 cents per clean kg across the micron range this season. Next week's offering is estimated at 44K bales with sales in all three centres on Tuesday and Wednesday only.
When wool buyers walked into selling centres to start the week, Australian wool was more expensive for exporters before bidding began. This set the tone for a shift in wool prices this week as the Eastern Market Indicator (EMI) finished 18¢ lower to 1134¢/kg. The US economy continues to stagnate with Q1 GDP growth estimates at 1.6% and persistent inflation. The appreciation of the Australian dollar to the US impacted buyers as the exchange rate sat above US 66 cents. Demand is persistent with over 34K bales sold this week, but buyers aren't 'desperate' as we approach the end of the 23/24 wool-selling season. The steepest losses were confined to the finer end of the offering, with 17MPG in Sydney losing 43¢ to 1665¢/kg and 18MPG in Melbourne dropping 37¢ to 1501¢/kg. Crossbreds also saw losses, with 26MPG in Melbourne losing 35¢ to 505¢/kg. The Western Market Indicator (WMI) finished 14¢ lower at 1273¢/kg and had a pass-in rate of 13% and withdrawals of 5.4%. Crossbred wool volumes, prices, and values have increased at Australian auctions for the fourth season running. The RBA's decision to not change rates eased some tension in the Australian economy, but the exchange rate for AUD/USD had already jumped back above the 66¢ mark. [d95363a4]