WEEKLY MARKET REPORT

Week Ending 7th May, 2021

 AWEX Northern Micron Indices Comparison

MARKET TO HOLD ABOVE 1300??

The good fortnight the market had with a combined 51 cent gain came to a sudden stop this week with a 23 cent retreat in the AWEX EMI to 1319. With 48,000 bales on offer and plenty of enquiry, all the showfloor talk was for a very solid to dearer market but by Monday afternoon it was evident that sentiment had changed as forecast rostered volumes for next week’s sale ballooned from 38,600 to 54,700 in a week, an increase of 41% with estimates for the following sale expanding by 22% (32,700 to 40,155). It would seem that early figures released for these 2 sales were grossly underestimated in the first instance giving buyers and exporters a false reading of up and coming volumes. Added to this was the extra volume of wool put into the next few sales as the market rose. Some of this wool was harder to place with higher VM and low yielding types held over from the drought. These wools were cheaper from the get-go and dragged the market lower.

As we stated earlier, the market shed 23 cents to 1319 with a similar fall of 26 cents in US$ terms to 1019. The fall in the FRX to 77.25 (0.65) was not enough to stave off the falling market. All fleece microns suffered falls (bar 21s and broader) ranging from 20 to 40 cents as all types came under pressure. Skirtings fell by similar amounts, 20/40 cents with low VM types (< 2%) with good AM results quoted about 10 to 20 cents back. Cardings recorded similar falls to their combing counterparts of 20 to 30 cents with low VM types less affected. All centres’ MCIs still remain above 900 averaging 912 cents. Crossbreds also lost ground to see most microns (26 to 32) give back 15 to 30 cents. The pass-in rate more than doubled to 15% up by 9% on the previous sale.

Apart from sentiment and quantity variation influencing the market, logistical problems and buyer finances are still at the forefront of exporters’ dramas. Their ability to plan buying strategies and put those plans into action week to week is somewhat of a guessing game as wool deliveries are still 2/4 weeks delayed into China and more to other destinations. The market has performed well and absorbed the larger volume on offer this season, over 104,000 extra bales offered to the trade when compared to the previous season with a market basically rising as demand picks up as the effects of Covid-19 slowly dissipate around the world. The latest testing figures released by AWTA make for some interesting reading. April figures show a 19% increase compared to April, 2020. Total weight tested season to date is up by 1% which equates to 264mkg tested compared to 261mkg last season due mainly to heavier wool cuts per sheep as a result of the better season and higher lambing % from last year. The largest offering since the opening sale of the year (54,700 bales) will test the market next week.

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 WEEKLY MARKET REPORT

Week Ending 30th April, 2021

 AWEX Northern Micron Indices Comparison

LARGE QUANTITIES, RISING A$, NO WORRIES!!

With the anticipated big offering this week of over 50,000 bales some in the trade were fearful that the extra volume catalogued would be too much for buyers and exporters to handle. After last series’ good gains, especially for sub 19s, the rush to capture the rising market added 6,000 extra bales to the roster. The market started on a solid but tentative note in Sydney in the opening session with Melbourne adding double digit gains to almost all MPGs. Momentum built on the second day as gains ranged from 10 to 50 cents depending on centre and micron. By week’s end rises of 30 to 40 cents covered all merino fleece microns bar 21s which gained 15 cents. Skirtings followed their fleece counterparts to record 20/30 cent lifts on most types with < 18.5 micron and < 2.5% VM 35 to 50 cents to the good. Cardings also kept up last sale’s momentum as the MCI rose by 25 cents to 922. All types in this sector recorded gains of 10 to 40 cents. Crossbreds had an up and down sale to finish the series about 10 cents cheaper. The AWEX EMI jumped by 30 cents to 1342 (2.3%), its largest weekly gain since mid February. In US$ terms the rise was just as impressive, 34 cents to 1045 (3.35%) as the FRX strengthened by 1 cent to 78 cents. Growers were happy with the rising market as the pass-in rate was the lowest since the end of January at 6.4%

Is this the start of the recovery everyone has been waiting for?? Signs are promising that the post Covid-19 global economy is growing but a full recovery is some time off. Signs for a solid market next week are good as Melbourne and Fremantle finished on a dearer note on Thursday. 48,000 bales are on offer.

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 WEEKLY MARKET REPORT

Week Ending 23rd April, 2021

 AWEX Northern Micron Indices Comparison

FINER WOOLS LEAD THE WAY

The solid finish to wool sales in Melbourne and Fremantle late in last week’s series gave hope that the market could reverse last week’s cheaper trend. All the talk on the showfloor was for a dearer market with emphasis on the sub 19 micron types with broader spec wools just holding their own or in buyers’ favour depending on how good or bad test results were. The market exploded into action from the opening lot with all Merino microns adding to their value regardless of micron, VM or mid-breaks with 17s in Sydney jumping 108 cents on the opening day. The market did steady in the final session as finer microns added to their values with broader types unable to hold the previous days increases to lose 10/15 cents. By week’s end 18.5 and finer added 70 to 130 cents with 19s and broader lifting by 10 to 50 cents. Skirtings also commenced the sale in a hurry with rises of 30/40 cents across the board with < 17.5 micron with < 2% VM 80 to 100 cents dearer. The final session saw the urgency come out of the sale room as 18 micron and coarser types give back 15 to 20 cents from the previous day. Cardings added money to their solid sale last week to average a 20 cent gain across the 3 centres with their MCIs now averaging 910 cents as all types in this sector were 20 to 50 cents higher. The crossbred sector had the quietest sale as quotes were in sellers’ favour for most types in this sector. The AWEX EMI added 21 cents to 1312 (16 cents in US$ terms) to 1011 as the FRX barely moved from 77 cents. Even with the rising market the pass-in rate was still on the high side at 10.7%.

Fine types continued their trend of recent months getting dearer while broader microns look to be in some sort of holding pattern with very little price change. As we have stated recently, with the good season pushing wool coarser by 1 to 1.5 micron, the volume of sub 19s is decreasing and broader micron wools are on the increase, thus the less volume in the finer sector of the market is pushing prices higher and the bigger volume and heavier VM levels of coarser types are causing buyers to struggle to place these wools despite steady enquiry and the stable FRX. China led the enquiry for new business with spatterings of new business written outside China with these few new containers immediately assisting the market. Of course the market is dependent on consumer demand with the easing of restrictions as vaccines get rolled out, encouraging more people to spend money which will be the key driver to lifting demand. Global economies will grow in 2021 but not as quickly as the IMF predicted as some countries vaccine rollouts are slower than anticipated and some countries experiencing more waves of Covid-19 such as India and Brazil. China, on the other hand, looks to be in recovery mode far more than other northern hemisphere countries. Their economic growth was 18% higher in the 1^st quarter of 2021 than in 2020 when their economy shrank by 6%. Industrial output for March was up by 14% and retail sales grew by a massive 43% from March 2020.  With the rising market national volumes have grown to 50,800 bales with some sectors expecting a slight downward price adjustment.

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 WEEKLY MARKET REPORT

Week Ending 16th April, 2021

 AWEX Northern Micron Indices Comparison

SALES RESUME ON A SOFTER NOTE

The resumption to sales after the 1 week Easter recess didn’t go to plan as far as some growers were concerned. An estimated catalogue of 52,000 bales was forecast when rosters were released last week but the totals were reduced to just under 50,000 by Monday as both buyer and seller were preparing for the market to fall marginally. This was the scenario that played out during the course of the sale as the AWEX EMI gave up 9 cents to 1291. In US$ terms the market tracked the opposite way to add 7 cents to 996, this due to the ascending FRX to 77.15 (up by 1.5%). The market fell early in the week as most participants expected but a last day recovery in Melbourne gave hope that the market has bottomed out for the moment. Finer types seemed to be in high demand as 18s and finer lifted by 5 to 40 cents to continue the trend since early in the year with finer microns becoming more valuable as the volume of these decreases with the good season pushing microns out by 1 to 1.5 broader than last season. AWTA figures back this theory up. This season has seen 15% less wool tested finer than 18.5 micron than the previous season. The trend was cheaper for 18.5 and coarser with falls of 25 to 60 cents as wools in this micron range increased in quantity with the good season, especially 19.5 and broader with higher VM lots penalised more and more. Skirtings had an up and down sale to finish the series about square with selected < 17.5 micron types with < 2.5% VM up by about 20 cents. The ever increasing VM levels could be a hindrance to advancing prices as skirtings are becoming more cotted and heavier in colour making them harder to place in orders. Cardings also had a quiet sale to have most types unchanged for the week bar high VM LKS being quoted 10 cheaper. Crossbreds couldn’t maintain their pre-Easter levels with falls ranging from 5 to 20 cents. The national pass-in rate was higher at 14% as some growers resisted the falling market. 

The well earned recess was a good chance for everyone to catch their breath. It gave buyers and exporters a chance to refuel their exhausted bank accounts. The big wool exports expenditure for February/March shipments was the main reason for stress on exporters’ finances but things are on the improve with funds now coming back to Australia with the arrival of wool in China and the week’s recess relieving some of the logistics problems for the short term. Interesting to note that Chinese imports of wool were up 64% this past February compared to a year ago.

The anticipated large offering and the stronger FRX were the main reasons for this week’s fall. The final volume of wool offered was 12% down from the original forecast and, with passed-in and withdrawn wool adding up to over 16%, just 39,700 bales were actually to the trade. As finer wools get dearer and broader types cheapen, the gap between them grows. The difference was 756 cents from 17 to 21 micron in Melbourne a month ago, now it’s out to 927 cents (2172 to 1245). With the market’s recovery in Melbourne on Thursday, things look good for next week. We sold some passed-in lots from this week’s sale this morning for increases of 30/40 cents from their passed-in prices. We open proceedings on Tuesday with 760 bales on offer and a national catalogue of 45,500 bales.

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 WEEKLY MARKET REPORT

Week Ending 5th March, 2021

 AWEX Northern Micron Indices Comparison

FALLING AUSSIE DOLLAR SAVES THE MARKET!

Stability looks to have set in for the wool market as this week’s sale produced just a 4 cent gain to 1310 cents. This follows on from the previous 2 series where the market has fluctuated by only 12 cents (1318 to 1306). All the pre-sale talk was for a cheaper market with the FRX reaching a 3 year high to climb above 80 cents (twice) which could’ve had the market on the back foot to the tune of 30/40 cents. Fortunately the A$ retreated to low 77 cents on Friday, this allowing buyers to stay in the game and do sporadic volumes of business to have a market that was just in sellers’ favour. With the falling FRX the market, in US$ terms, shed 20 cents to 1020. Sydney’s market wasn’t as positive as Melbourne’s with most microns either side of fully firm apart from 18 to 19 micron which shed 10 to 15 cents. Skirtings faded in the final session to finish the sale 10 cents cheaper. Cardings halted their run of 4 cheaper weeks with the MCI adding 10 cents to 869 as most types in this sector posting gains of 10 to 20 cents with < 17 micron lots up to 40 cents to the good. Crossbreds also had a solid sale with broader types > 27 micron fully firm and finer lots 10 to 20 cents higher. Australia’s biggest buyer and trading company (Techwool) dominated buying lists for most types with solid competition from topmakers and processors alike. Growers certainly warmed to the stable market as the passed-in fell by 9% to 9.3% with XBs still the biggest contributor to passed-in wools.

The fall in the FRX produced a scenario that sustained the current price levels despite a not-so-ideal retail economy. The softer FRX gave overseas mills and processors a cheap buy in price if operating in US$ or Chinese Yuan (CNY). The price advantage added up to 2%. As we have mentioned recently the logistic delay in shipping wool to its final destination is restraining buyers financially with additional business unable to be written. Knocking back new business due to financial constraints is nothing new but is just part of the business with the delays in shipping and therefore payments representing 2 weeks of exporters normal auction buying budgets, thus hampering further gains the market might have had with quicker finance available.

Much has been written in various media outlets recently regarding premiums for non-mulesed wool and the demand for it. Nearly all demand is coming from Europe and, with that sector of the market still a long way from being fully operational, premiums were and still are sporadic at best. Some media outlets reported “good premiums” of 20/30 cents being paid recently. A 1 to 2% premium can hardly be called that in most cases.  Most growers with non-mulesed wool are being urged to join a quality scheme called RWS (Responsible Wool Standard). More and more orders that request NM wool are specifying RWS certification as well. One grower who we sold wool for this sale looked to benefit from being in this scheme as the premiums ranged from 80 to 200 cents clean for the fleece wool that averages 4 to 5% VM. This amount of burr would attract a discount of 100 to 160 cents clean normally.   

Next week’s offering has just shy of 50,000 bales on offer to the trade - pretty much a normal volume when looking at the totals since January. Barring any disaster with the FRX ascending, the market should hold around these levels with still no word on when the trigger will be pulled on the Chinese government uniform orders. For those growers who wish to follow the Cumnock Ewe Competition next Tuesday there are a few seats left on the bus that will be going around the farms that have entered sheep. Contact Scott Darmody on 0402 772 342 or scott@macwool.com.au for any information regarding this good day out.

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 WEEKLY MARKET REPORT

Week Ending 19th February, 2021

 AWEX Northern Micron Indices Comparison

MARKET CRACKS 1300! YIPPEE!!

The Chinese New Year celebrations didn’t stop the wool market from advancing this week to break through the 1300 cent mark for the 1^st time in almost 12 months. Often around Chinese New Year can be a difficult time to sell wool due to mills being shut down and a sometimes general lack of interest but not the case this year. The AWEX EMI shrugged off the lacklustre 2 sales that saw the market fall 16 cents to record a 43 cent gain to 1318. The rise was just as impressive in US$ terms, a 37 cent jump to break through the 1000 cent mark to 1022 as the FRX was stable for the week at 77.50 cents. The market looks to be performing well in regard to FRX movements. 12 months ago the A$ was 66.50 cents - 16% less than the current level. The fear that medium micron wools (19 and broader) were getting left behind in the market rise were allayed this series as they posted the largest gains, 18s and coarser gained 60 to 85 cents (some better style types were up to 100 cents dearer). Fine fleece types did ascend also but the gains were restricted to 20/30 cents, a nice warm-up for the designated super-fine sale in Sydney next week. Skirting price movements were based purely on VM. All types < 3% VM with good AM results added 35 to 55 cents for the week with all burrier types fully firm. The carding sector continued on from the losses of the past fortnight to average a 17 cent loss over the 3 centres. LKS/CRT, broader than 17.5 micron, fell by 10/20 cents with STN taking the brunt of the losses retreating by 40 to 60 cents. Crossbreds had a mixed sale with combing types solid to 40 cents dearer but burry carding types and XB LMS were punished with some lots receiving only token bids. We passed-in 55% of all our XB LMS offered with talk that the road ahead for XBs could be a long one before there is any sign of improvement.

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