Currency movements have had a dramatic effect on the Australian wool market this week.
The Australian dollar rose by 0.89 cents against the US dollar since the close of the previous series. As the majority of Australian wool is traded in US dollars, this significant rise meant that in real terms buyer purchases became more expensive.
Despite this, the market in the Eastern centres opened solidly, particularly FNF types (fleece wool carrying less than 1.0per cent vm). However, as the sale progressed the market eased.
By the end of the day the Individual Micron Price Guides (MPGs) for Merino fleece in Sydney and Melbourne had fallen by between 1 and 30 cents, the only exceptions were the 17.0 and 18.0 micron MPGs in Sydney, which remained unchanged.
The soft finish in the East impacted the West (selling last) and the losses in Fremantle were felt from the outset.
The market opened weakly and then continued to deteriorate. The Western MPGs dropped by between 41 and 59 cents, the Western Indicator fell by 40 cents for the day. The AWEX Eastern Market Indicator (EMI) dropped by 8 cents, finishing the day at 1,302 cents.
Interestingly, due to the rise in the Australian dollar, when viewed in USD terms the EMI rose. The EMI added 10 US cents for the day. The second day the market retracted further.
The MPGs across the three centres fell by a further 11 to 44 cents, the EMI dropped another 18 cents, closing the week at 1,284 cents. Due to a slight reduction in the AUD the EMI also fell in USD terms, this time by 18 cents.
Many sellers were reluctant to accept the prices on offer, pushing the passed in rates up across the country.
By the end of the series 24.8pc of wool failed to reach seller reserve, this was on top of the 5.7pc withdrawn prior to sale.