The positivity surrounding the Australian wool markets continued into this wee s selling at auction. Despite the very large offerings of over 56,000 bales and disadvantageous foreign exchange rates in all of the major trading currencies , the Eastern Mar et Indicator (EMI) still man-aged to forge ahead by a further 12ac clean/ g to conclude the trading wee at 1434 ac clean/ g. This is the highest closing level ever recorded in AUD terms.

The EMI in US dollar terms also shifted upwards to 1079usc clean/ g a gain of 17usc clean/ g, proving the current strong demand for Merino types, and particularly the finer end of that breed, is ruling the overall market direction within the makeup of the EMI. Substantial wool top sales have apparently been made of the finer microns . This has depleted global stocks that have been held for some time and those top makers are now in a position to restock .

Melbourne sold on it’s own on Tuesday and the “frenzied buying’ witnessed all through last weeks selling was again very much apparent but much more type restricted. All Merino types finer than 19 micron sold to levels 50 to 90ac higher than the previous weeks close, but on the other hand, all wools broader than 19.5 micron showed signs of retreating. As the 2 other centres of Fremantle and Sydney joined selling on Wednesday this trend became more evident and continued throughout the rest of the selling week . The EMI reached a record high by the conclusion of sales on Wednesday.

The general sale results by the conclusion of the week showed all Meri-no qualities 19 micron and finer 35ac to 85ac dearer with the finest types best supported, but 19.5 to 22 micron wools all were on par to 25ac cheaper with the broader edge most affected .Merino skirtings sold in line with their fleece counterparts and the finest pieces and bellies were extremely well sought. Cardings sold fully firm to slightly dearer throughout and all of the crossbred selection had a mixed wee where prices initially fell but then staged a semi recovery on the final day. Price levels were par to 10ac cheaper for the week.

47,000 bales goes to auction next week, and given the slackening of the buying intensity and pressure seen on the final day of selling this week, a consolidation at best of the market is expected over the next 2 weeks. Chinese interests all depart for the Chinese New Year holidays commencing 28th January so a more relaxed market environment is expected and gives other users a chance to buy in some inventory.

Industry News

AWTA December Key Test Data

For wool tested through the month of December 2016, compared to the same period last season, there was 0.3% more bales tested or 1.0% more weight tested.

The progressive seasonal comparison for July 2016 – December 2016, compared with the same period last season, shows a total of 1.4% more bales or 2.1% more weight tested by AWTA so far this season.

AWTA Ltd has tested 180.7 mkg (million kilograms) this season com-pared with 177.1 mkg for the equivalent period last season or +2.03%.

AUD Commentary - Source SAW

The AUD rallied Friday, to close the wee at a high of .7560, helped higher by profit taking on the U.S Dollar ahead of to-night’s inauguration of Donald Trump as the 45th President.

Later today, Friday, we have the release of the all important China GDP report, which is expected to show growth 6.7% year-on-year growth, and if correct, meaning the world’s second largest economy was showing bumper growth figures for the December quarter, an outcome that will embolden the China bulls, and confirm the support seen for huge surge in many Commodity prices and in Agricultural products li e Meat, Wool, Cotton and Oilseeds. China’s markets will quieten into next week ahead of Chinese New Year, which starts on January 28.

The Aussie Dollar has also had a huge start to the year, rallying 355 pts from its 2017 low of .7163, traded on 1st January, to a high today of .7560, however many economists believe the Aussie rally is nearly finished. Economists say there are a number of key reasons for this, but especially after US Federal Reserve Board Chair Janet Yellen said during the week that the Fed is close to meeting its goals of full employment and price stability, Yellen said we could expected to see U.S Rates raised “a few ” times this year, also the upcoming legislation for a cut in the US company tax rate will drive the demand USD higher over 2017, and finally several Australia Banks believe that Australia’s very weak growth and inflation numbers will force the RBA forced to cut rates possibly twice over 2017.

Despite the rally in the AUD it still remains inside its long term down trend channel. Key support lies at .7440, and resistance at .7620

Southern Aurora Wool Forwards Report

A volatile week for both the physical and the forwards. Opportunities appeared then vanished for buyer and seller as both sides questioned the momentum in the market. The early rally of the AUD softened the tone from the outset but good demand in the fine microns kept the interest and forward pricing up. This was highlighted by trades in the 18.0 micron at strong levels out to April 2018. Demand on the broader qualities slowed and forward levels dropped significantly. 21.0 micron traded to a high of 1450 in the early autumn is now bid around 1400. Strong levels were achieved by growers with strategic GTC orders in the market through their brokers with season highs in both 19.0 and 21.0 microns.

The coming weeks will likely present challenges for buyers and sellers alike. Demand has been restricted by the rapid rise in prices but supply is expected to disappoint. This will likely lead to volatile market. The financial and currency markets expecting the same with the hand over of power this weekend in the US.