Weekly Market Reports


1st April, 2021

Thursday, April 01, 2021

 WEEKLY MARKET REPORT

Week Ending 1st April, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S40/20

This Week

M40/20

Last Sale

S39/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2118

2116 2102
+16 1743 +375

18

1828

1831

1799

+29

1578

+250

19

1582

1585

1571

+11

1508

+74

20

1365

1366

1365

0

1463

-98
21 1285n 1270 1280n +5 1458n -173
 26 - 804n 788n (M) +16 (M) 951 (M) -147 (M)

28

530n

526

510n

+20

703n

-173

MC

877n

894n

876n

+1

899n

-22

1,300 A NICE NUMBER TO FINISH ON!!

The market’s subtle rises this week and last have seen the AWEX EMI finish this run of sales at 1300 cents - an increase of 143 cents (11%) since sales resumed in January. The best performing microns have been the fine and superfine types (< 18.5) which have averaged a 246 cent gain in that time. Broader than 19 micron have lifted 116 to 192 cents, with the gap between 19 and 21 micron widening from 210 cents at the start of the year to 297 cents now. The way the days fell in March, we were able hold 5 sales with a total offering of 224,200 bales - the largest March offering in 10 years. As we stated, the market rose by 15 cents to 1,300 with fine wools < 19 micron the main beneficiary gaining 10 to 30 cents. Broader types ended the sale either side of firm by 5 cents. Skirtings had good rises over both days with < 2.5% VM lots 25 to 35 cents to the good and all others 15 to 20 cents better. Cardings had a pretty stable week with no real change in any centre ending with an average movement of -4 cents. Crossbreds also made minimal gains of 5 to 15 cents with the national pass in rate identical to the previous series at 9.5%. The FRX was also a mirror image of its level from last sale at 76.05 cents.

A highlight of our catalogue this sale was the offering of 380 bales of NM wool from two growers under the “Responsible Wool Standard” (RWS) - a voluntary quality scheme founded in 2002 by the Textile Exchange. RWS engages with participants all along the pipeline from growers to retailers in fibre and materials industries.  It’s no secret that for some time now processors and an ever increasing number of retail brands have expressed their desire to purchase more and more NM wool as demand increases. As we have mentioned in previous market reports, oftentimes premiums have been few and far between and in stark contrast to some media reports of NM wool premiums running at 5 to 10%, this was again the case. NM types that were not in the RWS scheme were mainly the same level as prices achieved by “mulesed wool”. Some NM lots even making less money than same mulesed wool types, except a few burry WNR fleece types selling 6 and 8% higher than equivalent mulesed wool. The lots in the RWS scheme were a completely different story, with most lots averaging an 8 to 12% premium (80 to 150 cents) above the market - this equates to $140 to $270/bale better for fleece wools.

Competition was widespread amongst all traders and exporters from China, India, and a smattering of enquiry from Europe, as buyers put to one side concerns of logistical and finance problems keen to secure quantity before next week’s Easter recess. Problems with shipping and finance are still dominating show floor talk, but reduced volume did ease pressure slightly when trying to finance purchases. The original rostered catalogue of 48,800 didn’t eventuate with 44,200 bales being offered, a 10% reduction which has been the case for some time. The cutoff point for which sales are deemed too large looks to be around the mid to high 40,000 mark - any higher the market struggles and below this figure the market seems to cope quite well. A quick look at the yearly comparisons actually has this week’s market 13 cents higher than the same sale 12 months ago. March 2020 was a bad month for the wool market, collapsing by 294 cents (1581 to 1287) when the rot set in from Covid-19 ramifications - and we’re still in recovery mode. Next week is a recess, we’ll offer 1,400 bales on Wednesday, 14th April. Happy Easter to all!!

                                                    Southern Aurora Fwd Prices

Micron

Date

Low

21

April-June 21

1270

Main Buyers (This Week)

1

Techwool Trading

6249

2

Endeavour Wool

3790

3

Fox & Lillie

3119

4

Australian Merino

3090

5

Tianyu Wool

2472

6

Modiano (Aust)

2418

Eastern Market Indicators (AUD cents/kg clean)

1300 cents é 15 cents compared with 26/03/2021

Northern Market Indicators (AUD cents/kg clean)

1369 cents é 13 cents compared with 26/03/2021

   AUD/USD Currency Exchange

0.7608 é 0.0002 compared with 26/03/2021


26th March, 2021

Friday, March 26, 2021

WEEKLY MARKET REPORT

Week Ending 26th March, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S39/20

This Week

M39/20

Last Sale

S38/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2102

2068 2063
+39 1883n +219

18

1799

1785

1769

+30

1754

+45

19

1571

1573

1566

+5

1665

-94

20

1365

1364

1350

+15

1632

-267
21 1280n 1273 1262n +18 1609n -329
 26 - 788n 785n (M) +3 (M) 1081n (M) -293 (M)

28

510n

519

510n

0

871n

-361

MC

876n

898n

864n

+12

987n

-111

LOGISTICS DELAYS HINDER MARKET’S RISES!

Many things are conspiring to dampen the wool market’s ability to go to “the next level”. A common theme was that when the vaccines were rolled out en masse the lockdowns and restrictions were being eased and consumers would go back to their old spending habits raising the demand for wool significantly. This may well be the case but recovery seems to be getting pushed back further and further - well into the 2nd half of this year and even into 2022 - as some European countries now experience a 3rd wave of Covid-19 and a much slower than hoped vaccination rollout. Great Britain and the US look to be well on track with their vaccines but Europe is very slow and, in fact, some countries have reintroduced lockdowns and restrictions that will slow the rate of economic recovery in the Northern Hemisphere.

The market only added 8 cents to its overall value taking it to 1285 for the EMI despite the FRX falling by almost 3% to 76 cents from over 78 a week ago. With the falling A$ the market, in US$ terms, followed suit losing 23 cents to 977, a good result for all as growers benefitted from a small rise in the market and exporters were on the receiving end of a cheaper buy in price for their orders. Finer fleece types saw the best competition as < 18 added 30 to 40 cents with broader lots 5 to 20 cents better. Growers warmed to this renewed buying activity as just 67 bales (1.7%) were passed in. Skirtings added 15 to 25 cents for 18.5 micron and broader with lots finer than this fully firm. Cardings also upped the ante with all types in this sector lifting by 5 to 30 cents depending on style, VM and micron. All centres’ MCIs are now aligned in price (876 to 898). Crossbreds had the least movement of all the sectors with most microns in sellers’ favour by up to 10 cents.

With the favourable FRX and the vastly reduced national catalogue, from 46,500 bales late last week to 38,500 bales offered (a 17% reduction) and the smallest offering since December - normally the market could’ve risen by 20 to 30 cents. No doubt the FRX and the smaller volume did help the market with all other currencies used in wool trading prices actually falling by 2 to 3%. Despite the wool market’s level with consumer demand still nowhere near where it was pre pandemic, the single issue restricting the market’s ability to rise is the seemingly worsening logistical issues from dumps to final destination. The delays in shipping are verging on chronic with exporters receiving multiple cancellations of ships leading to weeks and now in some cases months of delays tying up 10s of millions of $ in finance. Some reports indicate the notice time for cancellations are extremely short with wool dumped and ready for loading onto the vessels at the port being jettisoned off delivery and a new schedule “subject to change“ being issued. Some exporter’s containers have been cancelled 3 times from loading onto ships. India and European destinations are faring worse than China as ships bound for these ports are low in number and container space very limited and booked out well in advance of what was the norm a year ago. Next week has a national catalogue of 48,800 bales on offer. Hopefully a bit more business has been written to lift the market.


        Southern Aurora Fwd Prices            

Micron

Date

Low

21

April-June 21

1270

Main Buyers (This Week)

1

Techwool

4682

2

Tianyu Wool

3571

3

Endeavour Wool

3327

4

Fox & Lillie

3024

5

United Wool

2363

6

PJ Morris

1190

Eastern Market Indicators (AUD cents/kg clean)

1285 cents é 8 cents compared with 19/03/2021

Northern Market Indicators (AUD cents/kg clean)

1356 cents é 14 cents compared with 19/03/2021

   AUD/USD Currency Exchange

0.7606 ê 0.0227 compared with 19/03/2021


19 March 2021

Friday, March 19, 2021

 WEEKLY MARKET REPORT

Week Ending 19th March, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S38/20

This Week

M38/20

Last Sale

S37/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2063

2039n 2117
-54 1848n +215

18

1769

1770

1809

-40

1715

+54

19

1566

1564

1603

-37

1644

-78

20

1350

1366

1405

-55

1628

-278
21 1262n 1283 1307n -45 1632n -370
 26 - 785n 795n (M) -10 (M) 1095n (M) -310 (M)

28

510n

511

520n

-10

871n

-361

MC

864n

903n

880n

-16

1004n

-140

FINANCIAL CONSTRAINTS HINDER MARKET!

The reduction that the market had this sale was what many buyers had thought was coming for a few weeks. The fact that the market had traded in such a narrow band (1318 to 1309) for the past month had surprised many given the large national volumes on offer, the upward shift in the FRX (the wrong way for woolgrowers) and exporter troubles with finance and shipping delays. The AWEX EMI gave back 32 cents to 1277 (2.5%). The fall was less dramatic in US$ terms as the FRX rose to 78.35 cents, up by 0.85 of a cent, the EMI losing 14 cents to sit at 1000 in US$ terms. All sectors of the market fell. Fleece wools lost 35 to 60 cents across the board with only the very best style type with the exact specifications giving back 20 cents. Skirtings followed the fleece pattern of price direction with the better style low VM (< 2.5%) falling by 30/50 cents with all others losing 40 to 60 cents.  Cardings were overall cheaper in Sydney and Fremantle with both MCIs now in the mid 800s with Melbourne gaining 14 cents to lift above 900 cents to 903. Broader LKS were the main offender in Sydney to have its MCI fall by 16 cents to 864 as they lost 30/40 cents with most other types fully firm for the sale. Crossbreds opened the series cheaper but firmed in the closing session to finish the week in buyers’ favour.  The national pass-in rate climbed to 17% as more growers resisted the weaker prices.

This week’s fall marks the biggest downward correction for the year to date. Since the market rose in January the trading band of the EMI has been very tight (1275 to 1318) and we remain in the price bracket despite this sale’s fall. This sale saw the 1 millionth bale sold to the trade this season with 11.5% (106,000 bales) sold to the trade more than last season at the same time with total offerings up by 63,350 bales (5.6%). The overall value of the clip sold this season to date works out to be $1415/bale. The market is 160 cents (11%) lower than the same week last year. The gap was 400 cents before sales started back in January - the gap narrowing due to the big price collapse this time last year as demand fell off the cliff when the market lost 308 cents (1609 to 1301) in the January to Easter period. On the flipside in US$ terms the market has risen by 200 cents from 800 to 1,000 - a 25% increase. This is due to the FRX climbing by 40% from 55.75 to 77.35 and a clear illustration of just how much demand fell away last year when the FRX was very low.

As we alluded to earlier, financial constraints due to shipping delays and the constant run of weekly volumes in the high 40,000s finally took its toll on the market. The cautious ‘money management’ by buyers that led to a stable market finally relented with risk averse purchasing taking over to match the softer demand signals. The problems with delays in shipping wool that is tying up critical finance now flows all the way back to the wool dumps. The dumps are now so clogged up with wool waiting for delayed vessels they are unable to take delivery of wool early. This has led to dumps calling for wool to arrive the day prior to the ship’s cut-off. This means dumping, containerisation and reaching the port has to happen the same day instead of the usual 2/3 day lag time. This means shipping from our end has compressed in time with deadlines for wool down to 1 day rather than the 2/3 day time allowance that was the norm. Shipping companies estimate a 50% fall in the number of container ships in operation compared to 12 months ago. A ship with wool would arrive in China every 2-4 days, now its 1 every 7 to 10 days. Some buying companies have had to go to their banks “hat-in-hand” to get extra funds to buy wool while finance is tied up with wool on water. Market talk is firm for next week.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1250

Main Buyers (This Week)

1

Techwool

6383

2

Endeavour Wool

4019

3

Fox & Lillie

3836

4

Tianyu Wool

3798

5

United Wool

2974

6

Aust. Merino

2382

Eastern Market Indicators (AUD cents/kg clean)

1277 cents ê 32 cents compared with 12/03/2021

Northern Market Indicators (AUD cents/kg clean)

1342 cents ê 33 cents compared with 12/03/2021

   AUD/USD Currency Exchange

0.7833 é 0.0086 compared with 12/03/2021


12 March 2021

Friday, March 12, 2021

WEEKLY MARKET REPORT

Week Ending 12th March, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S37/20

This Week

M37/20

Last Sale

S36/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2117

2121n 2126
-9 1987 +130

18

1809

1825

1825

-16

1850

-41

19

1603

1601

1597

+6

1768

-165

20

1405

1400

1396

+9

1748

-343
21 1307n 1304 1297n +10 1743n -436
 26 765n 795n 804n (M) -9 (M) 1123n -348

28

520n

530

525n

-5

875n

-355

MC

880n

889n

869n

+11

1054n

-174

MARKET REMAINS STABLE!

Once again we saw a market that struggled to move as stability is the name of the game. The AWEX EMI gave back just 1 cent to 1309. The FRX lost a third of one cent to sit around mid-77 cents as the market added 6 cents to its value in US$ terms to 1016. Looking at the 3 centres we had almost 3 different results. Sydney’s fleece types fell by 5 to 15 cents for < 18s as 19s and broader had modest gains of 5 to 10 cents. Melbourne’s market was overall cheaper with all microns 5 to 10 cheaper bar 17s and 18.5 that rose by 5 to 15 cents. Fremantle fared the best of the 3 centres with 19.5 micron and finer 15 to 30 cents up with 20s and broader gaining up to 10 cents. Fremantle’s indicators are on par or up to 26 cents higher than their east coast counterparts - normally a good sign that the market here can play catch up to the higher levels.  Despite the up and down movements of the fleece market, just 4.6% was passed-in. Skirtings followed the fleece price direction as the opening day’s gains of 10/20 cents were given back in the final session to have this sector unchanged. Cardings continued their positive run as the 3 centres averaged a 19 cent gain to their MCIs as STN and CRT added 20 to 50 cents while LKS were fully firm. The fickle XB market gave up ground this sale as fine and broad microns (26 and 30) fell by 10 cents with the middle microns cheapened up by 30 to 40 cents.

The past few sales have seen the gap between superfine and medium types edge closer as the season for offering < 18 micron draws to a close leading up to Easter. Another widening gap is between medium type merinos and XBs as a global oversupply of 28 micron and broader hampers this sector of the market to have little chance of improving in the short term as demand is sluggish with full recovery from Covid-19 a long way off. On the international scene global demand for New Zealand wool is very strong albeit from a very low base with the market in South Africa continuing to edge further ahead of the Australian market with 19 to 21 micron well ahead of our prices as buyers push hard to secure wool from there as their selling season draws to a close. The selling season in South America is all but finished with virtually all their greasy wool at local mills to keep machinery running through the winter. Demand signals range from terrible in some sectors to enquiry emerging in other areas as supply will run short with the selling season closing in the 2 other main suppliers. Early stage processors are continuing to buy wool and build up a stock-pile ready when for when downstream processors call for “tops” kicks back into gear. Many in the wool pipeline are amazed the greasy market has lifted so dramatically from its low point of 858 cents in early September to +1300 today, a massive 66% gain given that demand from some of their customers is lack-lustre or non-existent with some delaying further purchases expecting a major shift in price.

In a global showcase of Australian Merino wool the America’s Cup team Luna Rossa Prada Pirelli has benefited from the performance attributes of the fibre in its sailing uniform thanks to a partnership with AWI’s subsidiary, The Woolmark Company. The partnership of The Woolmark company with this legendary Italian team highlights the strong link between the world of sport and Australian Merino wool as a premium performance fibre. The partnership has achieved immense media coverage and is influencing global consumers to consider and ultimately purchase Australian Merino wool for activewear. The Woolmark logo can be seen on the team Italy boat when the spinnaker is unfurled.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1270

Main Buyers (This Week)

1

Techwool

6292

2

Endeavour Wool

3545

3

Fox & Lillie

3486

4

Lempriere

2780

5

Tianyu Wool

2738

6

Kathaytex Aust.

2498

Eastern Market Indicators (AUD cents/kg clean)

1309 cents ê 1 cents compared with 05/03/2021

Northern Market Indicators (AUD cents/kg clean)

1375 cents ê 3 cents compared with 05/03/2021

   AUD/USD Currency Exchange

0.7747 ê 0.0037 compared with 05/03/2021


5 March 2021

Friday, March 05, 2021

 WEEKLY MARKET REPORT

Week Ending 5th March, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S36/20

This Week

M36/20

Last Sale

S35/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2126

2103 2125
+1 2072 +54

18

1825

1833

1840

-15

1932

-107

19

1597

1611

1611

-14

1826

-229

20

1396

1405

1397

-1

1803

-407
21 1297n 1309 1295n +2 1783n -486
 26 - 804n 781n (M) +23 (M) 1153(M) -349 (M)

28

525n

568

523n

+2

884n

-359

MC

869n

868n

859n

+10

1090n

-221

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.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1270

Main Buyers (This Week)

1

Techwool

7483

2

Fox & Lillie

4096

3

Tianyu Wool

3170

4

United Wool

3077

5

Endeavour Wool

2369

6

PJ Morris

2252

Eastern Market Indicators (AUD cents/kg clean)

1310 cents é 4 cents compared with 26/02/2021

Northern Market Indicators (AUD cents/kg clean)

1378 cents ê 2 cents compared with 26/02/2021

   AUD/USD Currency Exchange

0.7784 ê 0.0179 compared with 26/02/2021

19 February 2021

Friday, February 19, 2021

 WEEKLY MARKET REPORT

Week Ending 19th February, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S34/20

This Week

M34/20

Last Sale

S33/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2145

2144 2125
+20 2082 +63

18

1851

1878

1786

+65

1945

-91

19

1625

1639

1536

+89

1839

-214

20

1402

1419

1340

+62

1813

-411
21 1294n 1318 1223n +71 1798n -504
 26 765n 775 734 (M) +41 (M) 1151n -386

28

515n

536

510n

+5

894n

-379

MC

866n

872n

889n

-23

1105n

-239

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 1st 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.

The EMI is closing in on 12 month highs. Not since March last year has the market been at these levels when the full effects of the pandemic were being realised. The market has risen by 161 cents (14%) since the resumption of sales with the gap between 18 and 21 micron widening. At the opening sale in January it was 444 cents with the gap extending to 569 cents this sale. The old saying was that 18 microns should be 50% higher than 21s (which is now getting close), 1294 to 1851 is a 43% difference. The gap going broader was much the same, 28 micron should always be running at about 50% of what 21s are worth. This is certainly not the case with 21s at 1294 and 28s only at 515 cents again about 40%. As we mentioned earlier the Lunar New Year can adversely affect the wool market. Enquiry from China was reportedly slowing early in the week but very quickly changed to talk of new business being written in China and conversion to forward contracts from India. Exporters commented on how easily the new competition transferred price pressure onto all users as levels rose. Traders dominated the merino combing sectors with topmakers and indent buyers unwilling to be convinced of the longevity of current price levels. Processors and topmakers looked to XBs and cardings for value for money as competition displayed buying patterns pre-pandemic economy methods of operations. Something that has come to light is the delays in shipping wool to China. The ships seem to be getting held up in Singapore and delays of 2 to 4 weeks are common which is holding up wool deliveries to China and tying up critical finance that can be used for future purchases but has not had an adverse effect on the market to date.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1310

Main Buyers (This Week)

1

Techwool

6659

2

Fox & Lillie

4692

3

Endeavour Wool

3375

4

United Wool

2871

5

Kathaytex Aust.

2553

6

PJ Morris

2515

Eastern Market Indicators (AUD cents/kg clean)

1318 cents é 42 cents compared with 12/02/2021

Northern Market Indicators (AUD cents/kg clean)

1392 cents é 40 cents compared with 12/02/2021

   AUD/USD Currency Exchange

0.7751 é 0.0025 compared with 12/02/2021

12 February 2021

Friday, February 12, 2021

 WEEKLY MARKET REPORT

Week Ending 12th February, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S33/20

This Week

M33/20

Last Sale

S32/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2125

2142 2123
+2 2063n +62

18

1786

1806

1780

+6

1928

-142

19

1536

1547

1532

+4

1833

-297

20

1340

1333

1346

-6

1803

-463
21 1223n 1224 1243n -20 1773n (M) -549 (M)
 26 - 734n 799n (M) -65 (M) 1160n (M) -426 (M)

28

510n

518

555n

-45

866 (M)

-348 (M)

MC

889n

892n

898n

-9

1108n

-219

HAPPY CHINESE NEW YEAR, HOPEFULLY!

Since the big rise of 2 weeks ago the market had pretty much marked time but, by the numbers, has cheapened up slightly. The AWEX EMI lost 10 cents this sale to 1275 following on from the 6 cent fall the previous series with XBs, cardings and broader merino fleece types (20 micron and stronger) the main contributors to the EMI falling. This week’s largest offering since the opening sale of the year and the strengthening FRX gave buyers an opportunity to relax their buying patterns and take stock of what has been a frantic start to the year. With the stronger A$ the market rose slightly in US$ terms, up by 6 cents to 985. The merino combing types fared well despite the increased volume with all microns adding up to 10 cents bar 20s and broader which lost 5 to 20 cents. The worry for these broader types is the increase in volume of these microns due to the good season pushing clips broader with many growers reporting their wool 1 to 1.5 micron coarser than last year. The demand for these broader types has not increased as the volume has; with the opposite effect on finer clips - less in volume and increased demand. The pattern of price movements was the same in the merino skirting sector, fully firm for types < 20 micron but 10 to 20 cent losses for the broader types. A we mentioned earlier the fall in cardings contributed to the overall fall in the market. Washing types (< 2% VM) finished the sale unchanged with the 3% VM and higher lots losing 10/20 cents for the week. The MCI in Sydney fell below 900 cents to 898 - a loss of 11 cents. Just when we thought (and hoped) XBs may be on the long road to recovery, they took a large hit and were the main reason the EMI fell this week, all microns fell between 10 and 60 cents (5 to 8%).

Melbourne featured an excellent selection of Tasmanian wool this sale which seemed to woo the Italians from their slumber to underpin the solid market and increasing demand for fine and superfine types with these MPGs adding up to 45 cents in the south. You would expect these wools to be top prices for the week but it was a few lots from our colleagues in Cooma, Gordon Litchfield Wool, that sold two 14 micron lots for 3140 and 3020. Traders dominated the top positions of buying lists with top-makers, processors and indent operators all keen to purchase for their immediate needs. Apart from Chinese mills providing the backbone for current prices and the Italians chasing the “top end” clips, the largest European top-maker continues to operate with a smattering of Indian orders competing as well.  

Today marks the start of Chinese New Year, sometimes a tricky part of the year to sell wool. Many businesses are now closed for a week to 10 days which may cause difficulty in financing wool purchases for the next 2 sales. Reports have some mills already closed, some taking a 4 week shutdown and others working through the festive season to avoid workers returning from other provinces having to quarantine for 14 days. Some reports also suggest that a bit of “stocktaking” has happened over the past few sales even with demand further down the processing pipeline less than expected or needed. There is still plenty of showfloor chatter that massive uniform orders from the Chinese government are set to be placed at any time - most likely post Chinese New Year. Speculation is rife on the volume and make-up of the types of wools they will be purchasing but when it happens will it be like the charge of the light brigade?

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1265

Main Buyers (This Week)

1

Techwool

6135

2

Fox & Lillie

3804

3

Endeavour Wool

3638

4

Lempriere

2765

5

Aust. Merino

2718

6

Tianyu Wool

2613

Eastern Market Indicators (AUD cents/kg clean)

1275 cents ê 10 cents compared with 05/02/2021

Northern Market Indicators (AUD cents/kg clean)

1352 cents ê 10 cents compared with 05/02/2021

   AUD/USD Currency Exchange

0.7726 é 0.0110 compared with 05/02/

5 February 2021

Friday, February 05, 2021

WEEKLY MARKET REPORT

Week Ending 5th February, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S32/20

This Week

M32/20

Last Sale

S31/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2123

2105 2144
-21 2080 +43

18

1780

1778

1780

0

1943

-163

19

1532

1529

1537

-5

1834

-302

20

1346

1345

1340

+6

1800

-454
21 1243n 1243 1273 -30 1789n -546
 26 795n 799n 785n +10 1091n -206

28

555n

550

531n

+24

819n

-264

MC

898n

908n

906n

-8

1118n

-220

IT’S A BILLION DOLLAR INDUSTRY- OFFICIALLY!

This time last week there was some nervousness about whether the market could hold its ground after a decade long record lift of 134 cents. Fremantle’s close last Thursday saw most categories cheaper and we all thought that we could see a retreat of 30-40 cents. Fortunately this was not to be although there was some softness in patches but we look at 45,126 bales being offered which was over 5000 bales more than the previous week and one can feel reasonably happy with the slight adjustment.

This week gross sales of the Australian wool clip passed the 1 billion dollar mark which it has done every year for quite some time. This year it has taken five weeks longer to reach the milestone than last year which, when all is taken into account, is not such a bad result compared to what might have been when we were looking at the sub 1000 EMI last Spring. Hopefully we can report the 2 billion dollar mark before the end of June.

The export destination figures tell the true story of who is almost singlehandedly pushing this market along. YTD China has purchased 86% of our wool but trade sources of recent weeks say the figure is higher and over 90%. Many are asking should we be nervous about this kind of domination. The simple answer lay in the fact that the other competing destinations are simply not buying and without China who knows where this market may be? Information out of Europe has downstream processors showing year-on-year trading results down between 30% and 65% so orders are just not being placed whilst they trade out of their stock positions. Meanwhile China’s economy which faltered momentarily has rebounded on the back of strong domestic sales, particularly in the prestige apparel end. Wealthy Chinese shoppers are forced to shop at home with borders closed hence a big jump in high end fashion sales domestically. Wool has managed to avoid any of the geopolitical tensions that have affected other commodities. Wool is one of the longest traded commodities with China going back to the beginning of China’s more recent emerging affluence. Wool is a product that has a lot of value adding in China and the textile industry rates second in terms of contribution to GDP. The other helpful factor is that there are many strong, long standing relationships between the Chinese mill operators and the Australian wool industry. These relationships become critical when there is some turbulence about.

A quick glance at the above table far right sees that the gap YOY has completely closed sub 17 micron. In fact they are worth more now than 12 months ago. The 18 & 19 micron sectors are looking a lot better as well but I would be cautious just yet that the medium categories can close the gap too much in the short term. Seasonally we are beginning to see clips over a micron broader than last year so it’s easy to see where there will be some pressure on fine wool coming out of drought. I would not be as hopeful for wool above 19 micron as current production is quite plentiful.

A larger offering again next week will test the market with 52,822 bales being offered. Macwool/Carmichael will offer 1235 bales on Tuesday. Early mail suggests maybe a firm trend.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1240

Main Buyers (This Week)

1

Techwool

7734

2

Endeavour Wool

3945

3

Fox & Lillie

2879

4

Tianyu Wool

2470

5

Kathaytex Aust.

2346

6

United Wool

2290

Eastern Market Indicators (AUD cents/kg clean)

1285 cents ê 6 cents compared with 29/01/2021

Northern Market Indicators (AUD cents/kg clean)

1362 cents ê 7 cents compared with 29/01/2021

   AUD/USD Currency Exchange

0.7616 ê 0.0015 compared with 29/01/2021

29 January 2021

Friday, January 29, 2021

WEEKLY MARKET REPORT

Week Ending 29th January, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S31/20

This Week

M31/20

Last Sale

S30/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2144

2118 2012
+132 2038 +106

18

1780

1781

1651

+129

1893

-113

19

1537

1533

1396

+141

1795

-258

20

1340

1349

1230

+110

1753

-413
21 1273 1267 1163n +110 1731n -558
 26 785n 793n 715n +70 1081n -296

28

531n

541

461n

+70

803n

-272

MC

906n

911n

818n

+88

1114n

-208

BIG JANUARY LIFT IS DELIVERED AGAIN!

Melbourne’s dearer market on the final day of last week’s sales was just a taste of what was to come this week as all buyers unanimously were predicting a dearer market by at least 30 cents. This would have the market in the north rise by a minimum of 60 cents as we were well behind the Melbourne stand-alone market of last Thursday when some of their MPGs added up to 60 cents. From the opening lot prices skyrocketed with every fleece indicator in Sydney adding 100 to 140 cents to their previous values. The final day’s auction was more subdued with modest increases being recorded but, looking at some of the individual prices, some were better and some slightly cheaper than the quotes AWEX released after the sale. Most buyer sentiment was that the market “had the wobbles”. Still, by week’s end, it was a great result as the AWEX EMI climbed by 89 cents to 1291 cents with a 51 cent rise in US$ terms to 985 as the FRX fell by 1.5 cents to 76.25. All fleece indicators added 110 to 145 cents with virtually no type neglected and discounts for VM or any other fault shrinking as just 3.3% of the fleece offering in the north failed to sell. Skirtings were also swept up in the mad dash for wool as the large increases on the opening day were followed up by small gains in the final session but no hint of the market getting the jitters. Overall increases were 150 cents for the < 18 micron, < 2% VM types out to 19 micron jumped by 90 to 120 cents with the broader types looking 70 to 90 cents dearer. Of course, growers welcomed these substantial gains as just 36 bales-2.1%- failed to sell. Cardings also had major gains as the 3 centres’ MCIs are now all above 900 cents, 906 to 952 with the Sydney and Fremantle MCIs lifting by an average of 86 cents as all types in this sector (finer than 19 micron) added 100 to 130 cents with the broader selection 60/80 cents to the good. Crossbreds had their largest weekly rise since late October with 26.5 and finer adding 60 to 80 cents with the broader microns posting gains of 50/70 cents.

History tells us that for quite some years the market experiences a big lift in January. This year we had to wait till the final week of the month - but it happened. A 7.3% gain in the market for this series sees it at its highest point since mid-April with 19s and finer actually higher by as much as 459 cents (16.5 micron) with the broader wools up to 215 cents cheaper (21s). The recent pattern before Christmas when a big rise was on the market would react swiftly in the opposite direction and lose all the gains and momentum just as quickly. When the market has triple figure gains selling anything at the new level becomes almost impossible, 2 major buyers we spoke to yesterday said they hardly sold a bale on Wednesday night. This lack of sales became apparent in Fremantle late yesterday when the market gave up some of Wednesday’s gains - 20s and 21s now 65 and 90 cents behind the East coast levels with < 19.5 10 to 30 cents lower. This doesn’t auger well for next week as most forecasts are for a market to react in the negative hopefully not to the extent that we saw on several occasions pre-Christmas.

Traders and their Chinese counterparts led the price recovery this week. Bids well above the market were being received late last week and on Monday which quickly converted into instant and steep price rises in the opening session. The call for new business followed the rising market injecting further impetus into the gains. The smaller than anticipated offering of <40,000 bales and the depreciating FRX and demand from new forward and relatively prompt shipment orders also contributed to the (at times) frantic buying. 47,000 bales are on offer next week. Hopefully the EMI stays above 1250 cents.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1220

Main Buyers (This Week)

1

Techwool

4984

2

Endeavour Wool

3795

3

Fox & Lillie

3680

4

United Wool

3010

5

PJ Morris

2488

6

Kathaytex Aust.

2229

Eastern Market Indicators (AUD cents/kg clean)

1291 cents é 89 cents compared with 22/01/2021

Northern Market Indicators (AUD cents/kg clean)

1369 cents é 112 cents compared with 22/01/2021

   AUD/USD Currency Exchange

0.7631 ê 0.0142 compared with 22/01/2021

22 January 2021

Friday, January 22, 2021

WEEKLY MARKET REPORT

Week Ending 22nd January, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S30/20

This Week

M30/20

Last Sale

S29/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2012

2038 1907
+105 2082 -70

18

1651

1693

1592

+59

1917

-266

19

1396

1428

1389

+7

1809

-413

20

1230

1266

1246

-16

1778

-548
21 1163n 1169n 1180 -17 1766 -603
 26 715n 720 721n -6 1111n -396

28

461n

483

460n

+1

838n

-377

MC

818n

871n

789n

+29

1145n

-327

MARKET CRACKS 1200 HELPED ALONG BY SUPERFINES!

The market continued on from the solid start of last week with all sectors of the market fully firm to dearer. The national catalogue was predicted to be 54,000 bales early last week but was reduced heavily to 44,250 by the close of selling in Melbourne on Thursday, a drop of 18%. The pass-in rate fell to 7.6% with the dearer market to see 40,880 bales sold. The AWEX EMI gained 30 cents (2.5%) to 1202 and 27 cents in US$ terms to 934 as the A$ ascended slightly (77.70c), a change of 0.25%. Emphasis was on the sub 18.5 micron types in both sale rooms with fleece types 17 and finer posting gains of 105 cents while 17.5 to 18s added 60/75 cents and 19.5 in buyers’ favour and broader microns -15 cents. Skirtings added some impressive numbers from the opening sale as 18s and finer lifted 60 to 90 cents with broader lots 20 to 40 dearer. The carding sector again performed well with the 3 centres averaging a 41 cent gain. The cut off point for gains was similar to their combing counterparts; 18 micron and finer gained 35 to 50 cents while broader types lifted by 20/30. Crossbreds also had a reasonable sale as 26 and finer were in buyers’ favour with broader lots up to 10 cents dearer. As was the case last week, growers were looking for more of an increase as 17% was passed-in.

Finer wools certainly look to be the flavour of the month. The push for < 18 micron types started before Christmas and has continued in earnest over the past 2 sales. Broader wools seem to be in a holding pattern with the difference between 16.5 and 21 micron in Melbourne 1,055 cents (2224 to 1169) - this gap a long term average price difference. The gap in July (Sale 1) was just 500 cents, 1694 to 1194. One reason given for the widening price differential is the change of micron profile over the past 12 months. With good seasonal conditions over a vast area of wool growing districts the clip has broadened up with sheep not suffering from drought conditions and wools 19 micron and broader becoming more abundant and less wool finer than 18 micron. This situation is a complete reversal to what was happening in the drought.

As has been the case for some time Chinese buyers and forward traders dominated the market along with their top-makers and indent buyers. Showfloor chatter centered around the potential for large Chinese government uniform orders being placed. This is in stark contrast to the trouble that other exporters are having with China as their government is one of our largest single customers. Enquiry for forward offers continue to flow from the sub-Continent and Europe but the successful conversion rate to written orders is a long way off normal support from these two important destinations. The recent announcement that the tariff-free quota in China for the import of clean Australian wool is to be increased by 5% is welcome news. The increase of 3,600 tonnes of clean wool is part of the scheduled increase of 5% each year until 2024 when the quota will reach 44,300 tonnes. The rest of the clip that is shipped to China attracts just a 1% tariff which sees in this financial year 38,300 tonnes of clean wool which equates to 333,000 greasy bales free of tariff.

Next week’s national offering is very similar to this sale, 44,000 bales. The market finished very strongly in Melbourne on Thursday when they sold in isolation. As the market stands at the moment, 16.5 to 20 micron is averaging 40 cents higher in Melbourne than Sydney with all participants expecting our market to catch up to Melbourne next week when sales resume.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Mar/Apr 21

1180

Main Buyers (This Week)

1

Techwool

5059

2

Endeavour Wool

4396

3

Tianyu Wool

3501

4

PJ Morris

2953

5

Fox & Lillie

2842

6

United Wool

2812

Eastern Market Indicators (AUD cents/kg clean)

1202 cents é 30 cents compared with 15/01/2021

Northern Market Indicators (AUD cents/kg clean)

1257 cents é 24 cents compared with 15/01/2021

   AUD/USD Currency Exchange

0.7773 é 0.0032 compared with 15/01/2021