Western Market Indicator dips below 1500c/kg in first sale of 22/23 season.

An Australian dollar sliding two cents against the United States' dollar, effectively making exported wool paid for in US currency - as most is - cheaper and the annual three-week break in wool auctions from next week, were not incentive enough to halt sliding wool prices.

At the Western Wool Centre (WWC), 19.6 per cent of the Merino fleece offering was passed in short of reserve prices set by woolgrowers and their brokers on the first trading day of the new season, Australian Wool Exchange (AWEX) statistics showed.

On the second trading day the fleece passed-in rate blew out to 34.8pc and the Merino skirtings passed-in rate hit 28.7pc - having been just 9.2pc the day before.

But AWEX statistics also showed 14pc of the fleece offering and 10.9pc of the skirtings offering on the second day had been before buyers and rejected by them at least once at a previous sale.

Broking houses trading on the first day had only put up 5.7pc of fleece and 3.1pc of skirtings as reoffered lots and, as a consequence, did not have to take back as many unsold lots as brokers trading on the second day.

It was not the auspicious start to the new season brokers had been hoping for.

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Before COVID, first sales of a new season were normally big - last week's were that, with a total of 11,544 bales on offer at the WWC and 48,860 nationally - with good demand and firming prices as buyers looked to complete orders before the annual auctions recess.

But the relatively high volumes of reoffered wool on the second trading day last week only partly explains the high passed-in rates and sliding prices at the WWC last week.

When you factor in shipping delays and a two-month or more delivery time for Western Australian wool to Chinese early-stage wool processors, buyers were filling orders to get processors through the approaching three-week sales recess, back in May.

They had been buying up to cover the sales recess from about week 45 of the last selling season - about the time the WMI, as an indication of the strength of the local wool market, jumped above 1500c/kg for the first time since early 2020.

Apart from a little slide on week 48, the WMI stayed above 1500c/kg until it shed 43c last week to finish down at 1486c/kg.

In comparison, the benchmark Eastern Market Indicator shed 23c to finish at 1407c/kg.

Fleece price guide falls across the micron spectrum at the WWC ranged from 79c (to 2042c/kg for 18 micron wools) to 42c (to 1685c/kg for 1.9 micron wools) for the week and were generally bigger than equivalent falls at the Melbourne and Sydney selling centres.

The WWC 18-19.5 micron fleece guides finished the first week of the new season between 81c (19 micron) and 40c (18.5 micron) below where they were 12 months ago.

The only bright sign from the opening week at the WWC was Merino cardings, which added 2c to 931c/kg.

Main buyers were Techwool Trading and PJ Morris Wools, while Meliwa was knocked off third place on the buyers' list by Tianyu Wool on the second day.

Sequoia Materials returned to the buyers list at all three AWEX selling centres after not buying wool at the final sales of the previous season.

As reported in last week's Farm Weekly, a Sequoia Materials client, Redsun Wool Textile Co, the second biggest wool processor in China, was recently damaged by fire, but it is not yet clear what impact this may have on the local wool market.

Brokers are viewing this week's wool auctions with some trepidation over offering size.

While early indications are the WWC's offering will ease slightly from last week, back to a projected still large 11,439 bales, a forecast monster national offering is of more concern.

AWEX has indicated 61,054 bales could be offered nationally this week, a potential dumping of 12,194 more bales onto the market than was actually offered last week and potentially 19,447 more bales than was actually sold last week.

The Melbourne centre is scheduled to trade for a third day this week to cater for the extra wool listed for sale.

Once woolgrowers become aware of those statistics however, brokers expect a large volume of the WA listed wool to be withdrawn - because of the time difference across Australia, the WWC opens later and trades later than the Melbourne and Sydney wool selling centres.

With big selections on offer like this week's, there is a risk wool exporters with buyers operating at the Melbourne and Sydney centres will find all the wools they need to fill current orders at those two centres, without having to buy anything at the WWC.

AWEX, in its weekly wool market report last week, pointed out that if the 61,054-bale national offering eventuates, "it will be the largest wool sale since week 36 of the 2019-20 season".