The AWEX Regional Indicators finished 1.8% lower, on average, at sales in Sydney, Melbourne and Fremantle this week when the US exchange rate rose by 0.5% in the period up to Wednesday.

The season average for the AWEX EMI (1082¢) continues to rise and is now 214¢ (24.7%) above the average to the same time last year.

48,837 bales were on offer, compared with 40,850 bales last week. 16.5% were passed in, comprised of 12.8% in Sydney, 17.1% in Melbourne and 20.6% in Fremantle. Pass-in rates for Merino fleece and skirtings were 17.8% and 20.0%, respectively. 40,766 bales were cleared to the trade.

We have sometimes commented on how pass-in rates are influenced more by the change in the market rather than the absolute level of the market. This week’s market was another example of this. The last time the EMI was closest to this week’s value was in the week ending 4 March when it closed at 1307¢ and the pass-in rate was 4.1%.

The exchange rate fluctuated wildly this week, closing at 104.63¢ on Tuesday, then moving over 106¢ during Wednesday before closing at 105.83¢. The fall on Tuesday was attributed to the Standard & Poors lowering its long term outlook for the United States sovereign debt.

The associated loss in confidence resulted in a fall in the US exchange rate, as has now been seen a number of times in similar circumstances since 2008. The US Treasury Secretary, Timothy Geithner’s, assurance that there was no risk, together with good local economic data led to the lift in the exchange rate on Wednesday.

Continuing good economic data led to a further 1.86¢ rise on Thursday to 107.69¢.

The market was less buoyant this week with some buyers for China less active than in recent weeks. Demand was keen for the better types, but as reported in recent weeks, the quality of the offering in the East is showing the effects of the large amounts of rain, with increased quantities of cotted, discoloured, high VM and tender wools.

The fine end was the most affected and 19.5 to 22 microns least affected. As always it is important it keeps all things in perspective. The market remains at very high levels with the closing EMI up by 294¢ (28.5%) since the start of January and by 443¢ (50.2%) since the start of the season. Individual AWEX MPGs at the fine end are up by amounts of 74.6% (18.0 microns) to 92.5% (17.0 microns) since the start of the season.

The EMI in US currency (1402¢) also remains high and is up by 81.3% since the start of the season. The recent rises in the US exchange rate mean that the 58¢ easing in the EMI in Australian currency over the last three weeks converts to only 27¢ in US terms. The EMI was up by 4¢ in US terms on Wednesday.

It is also reasonable to expect some caution at current price levels.

Prices for skirtings fell on Tuesday, with the lower style wools with high levels of VM most affected. Prices fell again in the South on Wednesday, but were less affected in the North and the West. Crossbred prices also moved downwards with the coarse end least affected. Oddments were a bit mixed again, but generally moved down. The fall of 1.1% in the average Merino Cardings Price Guide was lower than that experienced in most of the average AWEX MPGs.

Buyers for China were dominant although some companies were less active than in recent weeks. Other major buying support came from buyers for Europe, India and Taiwan.

Sales will be in recess next week and resume in the week commencing 2 May, when 48,950 bales are currently rostered for sale in Sydney, Melbourne and Fremantle. The present estimate for the following sale (Week 45) is 41,100 bales; an increase of 10.4% over the two sale period when compared with last year.

Sales are in recess in South Africa until 3 May.