After a run of weekly gains, the Australian wool market eased this week. Importantly, while prices fell in Australian dollar terms, USD-based prices continued to strengthen, indicating that the softer AUD EMI outcome was currency-driven rather than the result of weakening offshore demand.

The EMI fell by 24 ac/kg to close at 1,665 ac/kg. The WMI followed this trend, easing by 19 ac/kg to finish at 1,859 ac/kg. In USD terms, however, the EMI found support, rising by 40 usc/kg, while the WMI increased by 49 usc/kg to close at 1,181 usc/kg and 1,314 usc/kg respectively. Notably, the EMI in USD terms is now at its highest level since 11 July 2019.

Across the catalogue, fine Merino types recorded declines of 40–50 cents, while medium Merino wools eased by 30–40 cents. Crossbred wools were less affected, with average declines of 5–10 cents. Merino cardings bucked the broader trend, finding support and gaining 10–15 cents.

Currency movements were a key influence on market results this week, with the Australian dollar strengthening against the US dollar. The firmer AUD was supported by rising expectations that the Reserve Bank of Australia may lift interest rates at its upcoming meeting, following stronger-than-expected inflation and labour market data. At the same time, the US dollar eased as markets digested recent Federal Reserve policy decisions.

From a broader perspective, the divergence between AUD and USD wool prices indicates that underlying offshore demand remains supportive, with the recent easing in local prices largely currency-driven. Should the Australian dollar stabilise or weaken, current USD price strength suggests the potential for improved AUD returns.

Despite the reduction in AUD returns, relatively high clearance rates reflected firm seller sentiment, with most willing to accept the prices on offer in the sale rooms.

Next week will see another strong offering, with 40,480 bales scheduled for sale. Sydney and Melbourne will sell Tuesday and Wednesday, while Fremantle will sell on Tuesday only.