WEEKLY MARKET REPORT

Week Ending 15th June, 2018

AWEX Northern Micron Indices Comparison

WOOL MARKET PEAKED – NO !

It seemed last week that our market had peaked, but spurred along by insistent demand from China and curbed supply from how sheep numbers of Australia’s Woolgrowers are again feeling the benefits of the resurgence in wool.

This week’s market finished in a positive territory after loosing ground last week. The EMI rose by 10c to 2021c. The main push was in the 19.5-22.5 microns which rose by 10 to 40c while 18.5 micron and finer had falls of 5 to 30c. Interesting to hear a comment made to me by an exporter this week that the market we now have is driven by demand from mills and not by our short supply, the key driver of course is China who import close to 80% of our clip.

The skirting sector was similar to the fleece in that 19 micron and finer lost ground by 20 to 40c, lots with 4% vegetable matter and greater were most affected. The broader types rose by 10 to 20c.

Carding wools rose by 4c for the week and Crossbreds improved with mixed results. 27 micron improved while 28 to 30 micron eased slightly. Crossbred lambs wool was again sought after by the trade.

This week saw $58.45 million spent on wool purchases and so far this season we have seen a $3.32b spent, which is a far cry from 1998 when prices hit a low average of $5.10/kg, which was well below cost of production.

We have been hearing from the exporting trade that certain Chinese mills are wanting more wool that is 110-115mm long, because they cannot get enough due to the fact that many wool producers shore early to cash in on the market and some are shearing at 6 and 8 months. These longer wools are used in the worsted section with their end use being apparel or fabric. Most of the combing wools we see on the show floor now are measuring 60-90mm.

So next week we see only Sydney and Melbourne selling with approximately 21,326 bales on offer – the smallest offering of the year. Macdonald and Co will, on Thursday the 21^st June offer 1688 bales.

Can we maintain these levels or go higher? Stay tuned.

Ag Concepts Fwd Prices as at 15th June, 2018

Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 8th June, 2018

AWEX Northern Micron Indices Comparison

HAVE WE REACHED THE PEAK?

After four weeks of continued large price increases the wool market has cooled slightly this week in the smallest offering of the season, only 26942 bales were available to the buying trade.

Despite this smaller offering, a softer tone was evident from the outset. The losses were mainly the finer microns resulting in 19.0 micron and finer losing between 25 and 50 cents clean.

A very limited supply of 21 micron wools and broader attracted strong demand pushing prices up by 15 cents clean for these types.

The Eastern Market Indicator (EMI) lost 16 cents off the record set in the previous sale and closed at 2011 cents.

The skirtings also suffered 20 to 40 cents loss, however skirting wools carrying less than 4.0% vegetable matter were not as affected by the drop  in price.

Crossbred wools were also cheaper with 28.0 to 30.0 microns off by 5 to 15 cents.

It was very evident this week that poorly prepared and very dusty clips in all microns lost buyer support and were the hardest hit in the falling market.

Most carding types remained firm on a limited offering.

Quantities increase next week with all 3 centres selling and a roster of 28.956 bales, Macdonald and Co will offer 1081 bales Wednesday 31^st. Will we see more falls who knows.

Ag Concepts Fwd Prices as at 1 June, 2018

Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 1^st June, 2018

AWEX Northern Micron Indices Comparison

OMG - EMI CRACKS 2000!!!

History was made as the AWEX EMI broke through the 2000 cent barrier to finish the sale at 2027, a 44 cent lift for the series. The all-time record was also set in $US terms now at 1533 up 32 cents for the week. The month of May has been a cracker for the wool market. The past 4 sales have seen the EMI sky-rocket by 191 cents (10%) which makes this rise the largest monthly gain since early 2012. In the mad scramble for volume buyers almost disregarded any faults - VM, colour and cott - to lift all microns 30 to 70 cents higher pushing all microns further into record territory leaving just 35 bales of fleece passed-in.

Room 2 types were not neglected either as the skirting market kept pace with their fleece counterparts. The

< 19 micron carrying less than 3% VM were 60/80 cents to the good while broader, burrier types gained 30 to 50 cents. Cardings again improved after a steady opening session to have all types 10 to 30 cents dearer as all 3 centres’ MCIs are 1470 to 1480. Crossbreds had their best result for 5 weeks as fine to medium types (25 to 28 micron) put on 25 to 55 cents with broader types up to 15 cents dearer.

This was another staggering sale where history was made as we offered our biggest catalogue since Easter and the largest in Sydney this sale. According to our calculations, if the EMI was tracking live with the auctions we were selling at the precise moment it would have broken the 2000 cent mark on Wednesday. According to historical charts and some guru’s conversion rate the boom of 1951 in real terms is 5 times higher than where we are now. This would equate to the EMI at about 10,700 cents, still along way to go and prove that those prices are unlikely to ever be surpassed!! Quantity is the only thing on the exporters minds at the moment as the need to keep machinery running is of more concern than the cost of raw wool or the price that can be passed down the processing pipeline from topmakers to spinners and weavers and on to retailers without pricing the final garment out of customers’ reach and cooling the current “insatiable demand”.

How long can this bull-run last?? Wool prices and end uses demand is in uncharted territory. Today’s demand is coming from vastly varied garments like outdoor sportswear, next to skin, double-facing fabrics and fake fur along with the traditional clothing. Next week has Fremantle on the sidelines as the East Coast centres offer 27,000 bales in what could be another record setting sale.

          Ag Concepts Fwd Prices as at 1 June, 2018

        Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 25^th May, 2018

AWEX Northern Micron Indices Comparison

CAN THE EMI CRACK 2000???

The market kept marching towards new records this sale as the AWEX EMI closed in on the 2000 cent mark finishing this series at 1983, a 40 cent appreciation from last sale. The rise was just as good in US$ terms gaining 39 cents to 1501 as the FRX swayed in the 75 cent range all week - this morning at 75.70 cents. A few buyers thought the frantic rises over the past 2 weeks would steady to have a market that could be slightly cheaper given the rapid rises we have seen. That wasn’t the case as the market had similar gains on both days to see all microns add 50/70 cents regardless of style, yield or VM.

Skirtings weren’t to be outdone either as all types and descriptions were rock solid with 18/19 micron up to 5% VM lifting by 30 to 40 cents. Cardings kept up with the combing sector of merinos with the 3 centres averaging 30 cent rises as all types added 20 to 40 cents to their previous values as the only weeks the MCIs have been higher was the pre-Christmas sale and the 2 opening sales in January. Crossbreds kept the same pattern as the few previous sales, < 26 micron up to 40 cents dearer, 28s and broader 10 cents off the pace.

Another record breaking sale as 17.5 to 22s are at all-time record levels. The EMI is 33% (488 cents) higher than a year ago and a massive 691 cents (53%) better than this time 2 years ago. Since Easter the EMI has rallied by 211 cents. All the talk is about quantity, the lack of it now and the looming tighter supply in the spring and into next year as the crippling drought gives no signs of letting up. The past 3 sales and the next 3 will see an average of just 32,000 bales/week, far below the quantity needed to supply the current levels of demand. This week and next has Fremantle holding 1 day sales then missing a sale to add to exporters’ woes about supply. The highlight of the recent gains has been the 19.5 and coarser microns as the gap between 19 and 22 is averaging 95 cents across the 3 centres - the gap at Easter was 180 cents.

Can the demand be maintained and higher costs passed down the pipeline all the way to the retailer?? The short term answer might be yes but long term, “who knows”. Plenty of growers heard the country hour interview where one Chinese processor was very confident through till spring and word from some fine wool processors that all is good in the sub 19 micron sector. Just 31,000 bales up next week. Will the EMI crack 2000 cents??                   

                        Ag Concepts Fwd Prices as at 25 May, 2018

Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 18^th May, 2018

AWEX Northern Micron Indices Comparison

MARKET HEADS TOWARDS THE STRATOSPHERE!

There was absolutely no hint of a correction this week as the wool market went on another upward trajectory similar to last series. The AWEX EMI added 52 cents to its value to smash through the 1900 cent mark to finish the sale at 1943, yet another all-time record. In US$ terms the gains were much the same - a 49 cent rise to 1462 (its highest level in 7 years) as the FRX did move around a bit, at one stage dropping to below 74.5 cents then regaining some ground to 75.25 this morning. They are now referring to this extended period of gains as a “super-cycle” that has lasted 112 weeks outdoing the raging market in the late 1980s. Most merino fleece types added 35 to 85 cents with no wools neglected (just 1% passed in) as 18 to 22 micron are now in all-time record territory in the 3 centres.

Skirtings also took a quantum leap as < 18 micron skyrocketed by 90/100 cents with the 19s and broader 60 cents to the good as buyers almost completely disregarded faults like colour, cott or VM.  Cardings took their lead from the other merino sectors as all types in this category lifted by 15 to 40 cents to have all 3 regional MCIs above 1400 cents. Crossbreds had a relatively quiet sale bar 26 micron which jumped by 50 cents, others up to 10 dearer as 26s and 28 micron re-write the record books with new highs.

No-one could have anticipated the rises of the past few sales as the growers lucky enough to have wool in the last 3 weeks have benefitted from a “buying frenzy”.  Can it keep going, when/if the correction will come and how big will that correction be??? These were hot topics of discussion at the 87^th Congress of the International Wool Textile Organisation in Hong Kong this week. A plethora of items were on the table from drought and supply concerns in Australia (notably NSW) and foreseeable low levels of production for the next 2 years to the demand side - global economic conditions are very good with consumer confidence levels still very high. The recent survey of wool textile conditions from IWTO is positive right through the industry. Retail and online sales have risen in China by 8 and 22% with an ever-increasing emphasis on sustainability. Also a good session was “wool’s contribution to wellness” the benefits of wool’s impact on human skin health, especially babies. Next sale’s roster drops even lower to 32,000 bales. Where to for the market, who knows???

                   Ag Concepts Fwd Prices as at 18 May, 2018

     Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 11^th May, 2018

AWEX Northern Micron Indices Comparison

RECORD BOOKS REWRITTEN – AGAIN!!

History again looked to repeat itself as all participants on the Eastern seaboard are keen watchers as to where the market in Fremantle finishes. Given the 2 hour time difference sales are well and truly done with here and, more often than not, how the market ends in the west is a guide as to which way the market will track here the next day. It was a welcome surprise to see Fremantle finish so strongly last Thursday and was just a sign of things to come as markets exploded into action on Wednesday as records were smashed. By week’s end all 3 centres made massive gains with fleece indicators climbing by 40 to 90 cents. The AWEX EMI set new daily and weekly records adding 55 cents to 1891, 23% higher than 12 months ago. The regional Indicator in the west is an incredible 2018 cents. 20 to 23 microns are at record highs as all types, regardless of yield, VM or strength were swept up in the scramble to secure quantity in most cases not worrying about faults.

Skirtings also benefitted from the supply squeeze as all types across all microns and VM levels posted gains of 50 to 60 cents. Cardings also were caught up in the buying frenzy as the 3 selling centres recorded double digit rises and the 3 MCIs are averaging 1410 cents across the country as all types in this sector rose by 15 to 30 cents. Crossbreds took a breather this sale as 28s and finer were in sellers’ favour with 30 micron and broader up to 5 cents off the pace.

A great sale to be in as there was no real indication that the market was going to rise in the fashion that it did. Futures trades pointed to a dearer market but nothing to the extent of the gains from the opening lot on Wednesday. The forecasts of a drop in the supply of wool not only in the short term but well into next year due to the state-wide drought in NSW and reduction in sheep numbers and the best FRX in a year (as the A$ sits well below 75 cents - 74.75 this morning) looked to be the catalyst for the renewed buyer activity as some lots were bought without limits and mills have virtually no wool in front of machinery waiting to be processed as hand-to-mouth operations have been the standard practice for some time.

Where to from here - that is the million$ question. The EMI, all regional indicators, 20 to 23 micron and 26s are at record levels and most merino microns at 5 year highs so for the market to keep improving would be quite the scenario given the climatic conditions affecting the quality of the clip and processors’ ability to pass on the higher costs. Next sale’s quantity is similar to this series. Will there be a correction, who knows??? 

           Ag Concepts Fwd Prices as at 11 May, 2018

Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 4^th May, 2018

AWEX Northern Micron Indices Comparison

MARKET MARKS TIME EVEN WITH LOWER DOLLAR

The cheaper trend in Melbourne and Fremantle last Thursday put fear into wool growers selling in this sale that the market might soften. They were spot on. An opening cheaper session in all 3 centres saw last week’s gains disappear but, in an encouraging sign on Thursday, markets looked to have leveled on the eastern seaboard and Fremantle’s fortunes were completely reversed from the opening day as they recaptured all their losses to have most MPGs firm to 20 cents dearer by the end of the sale. By week’s end results were mixed here and in Melbourne as all indicators < 20 micron were 10 to 35 cents off with broader types in buyers’ favour in Sydney and finer < 18.5 mostly dearer in the south and others either side of unchanged. The AWEX EMI gave up 10 cents for the sale to 1836. The move in US$ terms was minimal as well - 17 cents back to 1381. The FRX dipped to its lowest point since last June to 74.94 cents on Wednesday but did not assist the market - the A$ now at its lowest point (75.20 cents) almost 3 cents below its recent peak of 78.08 just 2 weeks ago.

Skirtings also came under some pressure as, like their fleece counterparts, only the very best fine and low VM types (< 3%) held their ground or made a slight advancement as the > 5% VM types were irregular but most looked 10/20 cents cheaper. Cardings also had a mixed sale with the MCI drifting back by 2 cents to 1377. Finer LKS and STN were in sellers’ favour, broader LKS off by 10 while CRT remained unchanged. Crossbreds took a breather from their frantic rises over the past 5 sales as < 28 micron remained solid with 30s and broader 20 to 35 cents cheaper.

The market movements were minimal this week as a low point in the FRX for 12 months couldn’t persuade buyers to step in and secure the ever decreasing volumes coming onto the market. The quality of the offering is still  the biggest factor influencing price direction which was the talking point and how to average these wools into orders that fit mills’ specifications is becoming more and more difficult as the “good“ wools become scarcer and burrier/dusty types are turning up to brokers’ stores literally by the truck load. The quality of the selection did improve marginally this sale but not enough to push prices up. The lift in prices in Fremantle yesterday could have been quality related but the eastern seaboard growers are hoping this will follow suit next week with national quantities averaging 36,000 for the next 3 sales.

              Ag Concepts Fwd Prices as at 4 May, 2018

   Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 27^th April, 2018

AWEX Northern Micron Indices Comparison

LEST WE FORGET

This week’s sale took on the unusual pattern of Tues/Thurs selling with the Anzac Day holiday in between, now widely regarded as our most important day of the year as more and more young people embrace the Anzac spirit and an ever increasing number of war-time stories emerge to re-inforce the significance of the day. Rumours of a solid market were confirmed on Tuesday as all sectors rallied as the AWEX EMI posted a 22 cent gain to a new high of 1847 to eclipse the previous record of 1834 at the end of February. The market may have suffered an Anzac day hangover on Thursday as the market for merino fleece types lost 5/15 cents in Sydney but a worrying 20 to 30 cents in the other 2 centres.  Despite the slight pull-back in the last session, the market still posted gains for all MPGs and the odd lot from Coonabarabran, Coolah and Gulgong with the “right specs” was 50 to 200 cents higher than their indicators.

Skirtings also benefitted from the renewed interest as, unlike their fleece counterparts, recorded rises over both days. The < 5% VM types up to 20 micron rose by 20/50 cents with burrier lots remaining rock solid all series. Cardings had a solid but unspectacular sale as most descriptions were quoted as firm to 20 cents higher than their previous values with a line of LKS from Wellington making an incredible 1050c (1630c clean). The revival of the Crossbred sector since Easter has been nothing short of spectacular with all microns adding 80 to 200 cents over the last 3 sales. The 130 cents jump for 25s in Melbourne last sale was outdone in Sydney with an incredible 149 cent climb this week as all other microns lifted by 30 to 90 cents.

The dramatic fall in the $A from just above 78 cents last Friday to 76 cents on Tuesday certainly helped the market in the opening session but couldn’t maintain the rise on Thursday even with a better FRX that has the $A at 77.75 cents. As stated last week the poorer selection of FLC  on offer is getting harder to average into orders as the high yielding and low VM types are becoming more scarce as just 37% of the FLC offering is below 1% VM compared to 50% 6 weeks ago. Also endangering the FLC prices as we move into the winter shearings is the lack of best topmaking style fleece - 17% back from 31% in the same time. Next week has 43,000 bales on offer and the cheaper markets in Melbourne/Fremantle could mean a steadier market all round.

                 Ag Concepts Fwd Prices as at 27 April, 2018

      Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 20^th April, 2018

AWEX Northern Micron Indices Comparison

BACK INTO RECORD TERRITORY

With last week’s 54,000 bale offering behind us and production forecasts now prophesying a decline in wool production it wasn’t that surprising to see the market push further into record territory. The offering of 39,605 bales saw the EMI end the week just 9 cents short of its all time high set late February but it was the 21 and 22 micron indicators that set new highs. It is quite conceivable that we could see 21 microns reach 2000 cents clean in the coming weeks!

The pace gathered slowly as the week progressed and clearly it was the medium wools where the strongest competition was. Fine wools, which led the rises late last year appeared to have plateaued with fewer of the best style lines on offer. Seasonal conditions are now impacting the quality of the offering with fleece wools under 65% making up over half the offering. Buyers are struggling to fill orders with enough high yielding, sound lines so discounts for lower average types will likely increase. Competition was mainly from Chinese interests but this week saw increased interest from Indian connections who punted some time back that the market would fall. It seems their stock levels will have depleted so it was either suck it up and wade into the market or shut up shop.

Crossbred wools this week also posted solid gains to hit a two year high with fair to average XB clips back to averaging over $1000 a bale. Merino oddments also saw another strong week with the carding indicator rising for the fourth consecutive week, about 100 cents for the month.

Next week is looking promising as Fremantle (which sells for two hours after Sydney and Melbourne close) continues to strengthen, normally a positive sign for the coming week. There is a slightly higher offering next week of 43,648 bales which shouldn’t pose too many problems. There is almost no wool stored on hold and brokers receivals are starting to lighten off as the impact of essentially 12 months of below average rain stalls production. Winks might be the safest bet in town but the next safest bet would be that this market won’t drift much over the coming weeks. Wool sales straddle Anzac Day next week with MacWool to offer a stylish catalogue of 1085 bales on the second day.

                                                         Ag Concepts Fwd Prices as at 20 April, 2018

Main Buyers (this week)