WEEKLY MARKET REPORT

Week Ending 17th September, 2021

 AWEX Northern Micron Indices Comparison

MARKET MARKS TIME!!

The market followed its recent pattern of up and down movements this sale, but instead of weekly shifts of cheaper and dearer prices the movements were day to day. The AWEX EMI fell by just 9 cents to 1352 as the opening session’s fall of 16 cents was somewhat cancelled out by a 7 cent increase on the final day. The peaks and troughs in the market look to be edging higher as the 2 low points in August were 1330 with a peak of 1355. The market went to 1360 last week before dropping to 1345 on this sale’s opening day then rebounding to above 1350 on the final day.

The up and down pattern of price adjustments was across all sectors. For fleece types, most movements were restricted to losses of 10 to 15 cents bar the 17s that fell by 25 cents and 16.5 and 18.5s that finished in seller’s favour. The skirtings ended the sale 10 to 20 higher for low (< 5% VM) and 10 cents cheaper for high VM types. Cardings regained their opening day’s losses to end the sale just in buyers favour as the MCI fell by 4 cents to 881. The sad story continues for XBs with the initial falls unrecovered like the merino sector to record losses of 20 cents. Many burry types and short/carding wools were either “no bids” or had very little interest with this scenario in play for some time. The FRX fell slightly to 73.25 cents but was of no help to the market with the pass in rate edging up to 12.7%.

For some time now more and more emphasis has been placed on ‘Sustainability and Traceability” right along the wool pipeline from grower to retailer. Another major issue looming from Europe is with the EU Product Environmental Footprint. The PEF is a lifecycle assessment based method to quantify the environmental impacts of products or goods and services. It can be thought of as a ‘benchmark’ – a standard or point of reference against which any comparison can be made. In the context of PEF, the benchmark is the average environmental performance of the representative product sold in the EU market. More on this in upcoming reports.

Ram sales are ramping up with some outstanding results so far for both Merino and XB rams. Some sales from the past week include Yarrawonga at Harden which sold all 268 rams on offer to average $4,125 with a top price of $13,000. Wealla at Gilgandra achieved a top price of $5,500 with 100% cleared (100) to average $2,010 up by $350 from last year. Gullengamble at Yeoval cleared 92% of their 135 offered rams with a top price of $8,000 to average $2,600. At Trundle, Darriwell stud had a top price of $20,000 with just 3 rams from the 100 offered passed in to average $3,135.

Once again, European interests look to be dominating buying lists with their renewed competition for most of the better specified types and FNF lots. This is causing the Chinese and Indian buyers to adjust their premiums and discounts on most tested parameters to hit the minimum specifications needed at the ideal price points. The yo-yo effect on prices is a result of extra competition, increasing demand and ongoing price adjustments having to be made. Market should be firm to seller’s favour next week according to our sources.       

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 10th September, 2021

 AWEX Northern Micron Indices Comparison

MARKET BREAKS THROUGH 1350!!

As we predicted last week, the market did claw back last series’ losses and some with all the rises coming in the opening session. The heat did come out of the market on the final day of selling in Sydney and Fremantle, but Melbourne bucked the cheapening trend to add a couple of cents to its indicator. By the close of trade the AWEX EMI rose by 29 cents to 1361 and a 31 cent gain in US$ terms saw the indicator climb over 100 cents to 1005. This was against a rising FRX that broke through the 74 cent barrier on Tuesday to settle at 73.85 today from a low of 73 last week. All merino fleece types rose to the tune of 25 to 45 cents. Skirtings took the lead from their fleece counterparts with rises of 30 to 50 cents on the opening day and sustained that gain with an unchanged market in the final session. Cardings, like the fleece wools, had positive then some negative movements to record 20 to 50 cent lifts, bar > 3% VM STN which gave back 10 to 20 cents. All 3 centres’ MCI’s are now averaging 896 cents. Crossbreds continue to lag behind merino types with 28 and broader losing 5 to 10 cents except 26s in Melbourne which added 30 cents. The national pass-in rate dropped to 9% from 20% last sale.

All the talk was positive from the last lot sold last week till Tuesday’s sale, as buyers booked up plenty of wool at good premiums above previous week’s levels, which translated into good increases in the sale room on Tuesday. Most were predicting 20 to 30 but the gains of up to 50 cents put a stop to fresh enquiry as most traders could not sell a bale later in the sale (Wednesday) thus the market stalling. Europe looks to have taken up some of the slack from China at the moment as the continent returns to work from Summer holidays and demand is good with most processors back to full capacity. Some buyers who did very little business with Europe are selling a lot more to them than in past years. Some prices paid for sub 16 micron fleece types were excellent with gains of 1200 to 2500 cents clean from last week for some 14 to 15 micron lots. Some lots from 14.4 to 13.1 micron made from 4700 to 7400 cents. This week marks one year since the market bottomed out at 858 cents. At today’s level of 1361, this is a 63% recovery in the EMI. How far can it go?? Some buyers and brokers are very confident that the market can go higher when the Asian demand picks up and competes with the European demand. This may happen sooner than later.

Ram sales have commenced with Haddon Rig holding their sale yesterday. Covid-19 didn’t seem to restrict the sale as nearly 200 poll rams sold from a top of $19,000 to average $3,236 and 130 horned rams averaged $2,760 with a top of $20,000 - a combined average of $3,045 for the 330 rams sold. AWI elections will be held in November and a vote on the woolgrower levy to be paid for the next 3 years, from July 2022, is to be held. Any grower that has paid $100 in levies over the past 3 years is eligible to vote. Voting can be done online from Monday, 13^th September till Friday 5^th November at www.woolpoll.com.au or 1800 211 736.

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 3rd September, 2021

 AWEX Northern Micron Indices Comparison

 MARKET GIVES BACK GAINS!!

The market’s fortunes went in reverse this week as last series’ gains were given back plus a bit as the AWEX EMI fell by 18 cents to 1332. The losses in US$ terms amounted to just 4 cents stopping at 974 as the FRX gained traction against the A$ to climb back through the 73 cent mark. The losses were very even across all microns with 15 to 30 cent falls from 16.5 to 22s. The superior superfine offering for the opening designated superfine sale of the season saw some healthy premiums paid - up to 175 to 200 cents clean for “Italian” types. Skirtings suffered similar falls to the fleece wools (15 to 30 cents). Heavy VM (> 5%) cardings and 17 to 18 micron LKS fell by 10 to 20 cents shaving 10 cents off the MCI to leave it at 863 cents. The crossbred sector was the least affected with 28 to 30 microns just in buyers’ favour and the broader and finer types 5 to 10 cents dearer.

Even though the market fell, signs of a recovery on Wednesday gives hope that the market may firm up next week. Sydney and Fremantle had a solid to dearer tone in this week’s final session and overnight enquiry should convert into sales if history is any guide. The market’s sluggish start to the season - a 91 cent fall (6%) is still a long way in front of the levels 12 months ago. August 2020 saw the EMI collapse by 205 cents from 1134 down to 929 with the low point of the market being in sale 10 (1 year ago next week) when the EMI fell to 858 cents. This equates to a 64% gain in the market to today’s level. The 17 micron indicator (Melbourne) is 1085 cents better - a massive 81% lift.

Top-makers and early stage processors continue to dominate buying lists with European interest’s keener than their Chinese counterparts. As feed dries out and sheep start picking up more VM late into the Spring and early Summer we’ll see if the current status quo remains when the higher VM wools come in and FNF fleece types dwindle. The cutoff point for VM discounts in fleece wools is about 2% at the moment, if and when this will change depends on when the heavier VM clips hit the market. Currently discounts for VM higher than 2% look to be way over the top.

Last week saw the National Ram sale held via the online platform AuctionsPlus. The annual event that is usually held in Dubbo was moved to Mudgee with the sheep show, stud displays and fleece judging cancelled due to Covid19. With interstate travel restrictions and lockdowns in place, some studs decided not to offer rams at the sale reducing the catalogue to only 32 rams. Overall, 21 rams were sold to a top of $15,000 with an average of $4,550. Nerstane from Walcha achieved the top price and the 3^rd highest money ($7,750). In a New England trifecta, Alfoxton from Armidale sold the 2^nd highest price ram for $10,500.

As we mentioned earlier, the market looks as though it will claw back this week’s losses and the EMI could break back through the 1350 cent mark.

Southern Aurora Fwd Prices

Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 20th August, 2021

 AWEX Northern Micron Indices Comparison

A COVID-19 CRASH? NOT LIKELY!!

After last week’s big fall and high withdrawal figures for this series, hopes were high that the reduced volume would be a catalyst to steady the market. This sale was at one point rostered for 46,000 bales, then fell to 38,000 on Monday. By weeks’ end only 34,400 bales were offered with 28% passed-in and 15% withdrawn meaning only 24,600 bales actually sold to the trade. Fremantle held its sale over just 1 day as only 4000 bales were on offer - 58% passed-in and 7% were withdrawn to have only 1,700 bales sold. This being the lowest weekly “sold” figure of any selling centre since AWEX records began in 1997. Tuesday’s market opened on a much cheaper note to follow on from last sales' poor performance but signaled some hope as it showed some resilience to level out on Wednesday. Again, 25 to 60 cent losses were across the board for all merino fleece microns. Skirtings fared just as badly as their fleece counterparts with losses ranging from 40 to 70 cents. Cardings also suffered heavy losses with all types in this sector giving back another 20 to 50 cents bar < 18.5 micron LKS which finished just in buyers’ favour.  For the 2^nd sale in a row the crossbred sector looked to be the least affected with falls confined to 10 to 20 cents. The EMI fell by another 37 cents to 1335 - that’s 93 cents for the 2 sales since selling resumed. In US$ terms the 41 cent fall saw the indicator drop below 1000 cents to 970 as the 1 cent fall to 72.60 in the FRX wasn’t enough to stop the market falling. The A$ is well below 72 cents today - a 9 month low.

The enticement of cheaper prices at the end of last week failed to draw any new business from any of the major mills in China which resulted in the ongoing price reduction on the opening day. The ongoing container terminal closure in China and the latest Covid-19 reduced demand hiccup conspired to keep confidence low in the initial session with some smatterings of business stabilising the market on Wednesday. Italian interests were highlighted this week as one of their major companies purchased heavily. After just 4 sales this season this buyer has bought 39% of what they secured at auction all last season. He purchased a big volume of superior superfine wools in the Carmichael section of our catalogue from Mudgee and the New England at good premiums (up to 180 cents clean) above market rates. We also had a big run of excellent XBs in the Carmichael section which sold well. The good premiums (5-10%) that RWS certified wools are getting is also worth noting.

The Australian wool production forecasting committee has predicted shorn wool production is expected to rise by 5.2% (up to 310mkg) when compared to last season. This is up by 26mkg from just 2 years ago due to excellent seasonal conditions coming out of the drought and good lambings over the past 2 seasons.

In more Covid-19 news, as we know all businesses must have QR codes - this is a requirement for shearing sheds as well. Some sheds in southern NSW were inspected with fines and infringement notices issued for non-compliance. Growers are reminded to ensure that QR codes are available for use or a sign-in register is to be provided for all farm workers.

Market should be firm next week.

Southern Aurora Fwd Prices

Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 13th August, 2021

 AWEX Northern Micron Indices Comparison

OUCH!! A PAINFUL START TO SALES.

It was a bad resumption to wool sales after the 3 week winter recess. Most participants were hopeful of a solid market even with forecasts predicting 57,000 bales 2 weeks ago. Last Friday, this fell to 53,000 bales and with the FRX in our favour by over 1.5 cents the market was looking to be just in buyers’ favour when auctions commenced. Up until one of China’s main buyers suddenly withdrew from the market only minutes before selling started. This resulted in the market almost “free-falling” on Tuesday with losses ranging from 130 cents for 16.5s in Melbourne to 40 cents for 21s. The market looked to steady a bit on Wednesday with a few finer microns losing 10 to 20 cents and all others 5 to 10. Hopes were up for a leveling market in Fremantle which concluded up to 20 cents dearer. Melbourne finished the sale in isolation on Thursday with < 17.5 losing more ground and coarser microns slightly up. The AWEX EMI lost 56 cents to 1372 and fell to 1010 in US$ terms (a 55 cent loss). By the numbers, finer than 19 micron fell by 70 to 90 cents with broader wools 40 to 60 cheaper. Again, it was the finer microns that took the brunt of the losses in the skirtings as < 18 micron lost 70 to 100 cents with > 19 reduced by 30 to 50 cents. Cardings lost anywhere from 30 to 100 cents depending on type as the 3 MCIs lost an average of 45 cents - all still sit above 900 cents (903 to 938). The crossbred sector was the least affected as opening session falls of 20 to 30 cents was the only movement for the sale. The pass-in rate skyrocketed to 33%.

So why the big fall?? The absence of one of China’s largest processors for the whole sale and the quieter buying patterns of 2 other major buyers was a main reason, while the annual discussion over big quantities after a recess still rages. One solution to avoid a large catalogue after a recess is to shorten the break to 2 weeks but getting buyers/brokers to agree on this is akin to saying Covid-19 is not spreading!! Chinese demand was poor at best but India, Italy and the Czech Republic seemed to maintain their pre recess buying patterns albeit at lower prices. Covid worries (Delta strain spreading rapidly) could have a dampening effect on demand from China in the short term. The ability to move greasy wool further down the processing pipeline has suddenly (over the recess) become a big hurdle to jump as some exporters are still experiencing financial constraints despite many “letters of credit” being opened during the break. The shipping and supply chain delays that have been a major problem and still pose some difficulties could be exasperated as a dock worker has tested positive to Covid-19 causing the closure of a major container terminal. The (1.35 billion US$) state-of-the-art Ningbo container terminal is located 100km south of Shanghai and was the 3^rd busiest container port in the world last year.

Quantities have reduced sharply to 41,000 bales next week but may not be enough to halt the markets slide. We are hope they’re wrong!!

Southern Aurora Fwd Prices

Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 9th July, 2021

 AWEX Northern Micron Indices Comparison

NOT AS BAD AS EXPECTED!!

Even though the market opened the new season on a cheaper note (that was widely anticipated by buyers) the AWEX EMI did manage to stay above the 1400 cent mark. Results in the 3 centres were markedly different as Sydney fell by 12 cents and Melbourne and Fremantle recorded 2 cent gains. The softer start to the series was turned around by the end of selling in Melbourne on Thursday (in isolation) with all Merino MPGs averaging 20 cents better in Melbourne than Sydney by the close of the market which augers well for next week. In the final washup the EMI lost just 3 cents to 1420 with 17s and finer, 18.5 and 19.5/20s falling by 5/10 cents. A fall of 25 cents was the result for 17.5/18 micron while 19 and 21s added 10 cents. After initial losses in the opening session skirtings recovered to finish the sale in buyers’ favour bar some high VM types with poor AM readings to be 20 to 30 cents off the pace. Cardings followed a similar pattern to their combing counterparts to end the series in buyers’ favour with the XB selection 15 to 30 cents cheaper across the board.

The sharp rise in the FRX on Monday night (to 76.5 cents) sent the market south in the opening session on the East Coast but, by the time Fremantle finished selling, a change in sentiment had come to see consolidation on Wednesday and a dearer market to end the week. The big initial offering of 56,000 then 53,000 bales didn’t frighten buyers away as first thought with an expected fall of 20 to 50 cents for most fleece types never eventuating. Many fabric and garment makers had been questioning the rises over the past 6/8 weeks when there were no signs of increased consumption in the Northern Hemisphere and nervous about whether consumers would take up the slack in their up-and-coming autumn. It looks as though early stage processors got a little over excited and pushed prices beyond the comfort level of their downstream users when retail demand had not increased. This time of year can often see large volumes of wool hitting the market (start/end of financial year) with some brokers absolute disregard for orderly marketing, this week’s sale being the biggest so far this year and next week identical (51,300 bales) adding up to 64% more wool offered than the 2 corresponding sales last year at 66,100 bales. Buyers will be mindful of the up and coming 3 week recess here and the 6 week recess in South Africa (currently under way) and no sales in New Zealand, there will be no access to wool sales anywhere in the world till early August. Hopefully this recess will give them a chance to deliver wool to mills and open letters of credit to allow funding for when sales start again. Showfloor chatter is for a solid to dearer market.

Southern Aurora Fwd Prices

Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 2nd July, 2021

 AWEX Northern Micron Indices Comparison

A RECOVERY SEASON ENDS ON A SOFT NOTE!!

As we forecast in last week’s report, the market may have reached its “Everest” for the moment. The slightly cheaper tone in the final session was a precursor for this series. The ongoing shipping delays that are tying up vital finances and predicted Sale 01 volumes of 55,000 bales (the largest sale since March, 2020, after the wool industry software provider was hacked forcing a cancelled sale) was enough to firmly put the brakes on the rising market for the time being. The AWEX EMI gave back 45 cents (3.07%) to 1423. The losses were similar in US$ terms, 38 cents (3.41%) to 1070 as the FRX finished fractionally lower at 75.2 cents. No sector of the market was immune from the cheaper trend as Merino fleece types fell 55 to 85 cents. Skirtings gave back 25 to 40 cents with the low VM (< 2.5%) with good specs less affected. The 3 centres’ carding markets had 3 different results: Sydney lost 13 cents, Melbourne was in sellers’ favour and Fremantle adding 30 cents to see all 3 MCIs averaging 965 cents. Crossbreds also lost ground by 10 to 20 cents for most types. The pass-in rate climbed to 21% but for the season was 5.4% lower than the previous season at 11%

It was a disappointing way to finish the season but a look at the numbers over the past year paint a picture of recovery that no-one would’ve predicted from what was a dire situation due to the pandemic. The market is 27.5% higher than 12 months ago - 1423 to 1116 with the low point of 858 in early September - the EMI now 60% higher than the low point. The market is 300 cents (38%) better in US$ terms and the FRX stronger by 6 cents. As the table above illustrates, all but XBs are higher than last year, especially < 19 micron with superfine wools at 2 year highs. There were 311,000 bales extra offered this season (1,782million) up by 21% with the $ amount at $2,246.72 million, up by $274million. The top price for the year was 4,900 cents for a 12.8 micron fleece bale sold in May. China completely dominated the market to purchase over 80% of the clip as India and Europe continue to build up their processing capacity but are not operating anywhere near full capacity yet. With vaccinations well on track in the northern hemisphere it is hoped by the end of 2021/early 2022 lockdowns and restrictions will be a thing of the past with all facets of life back close to normal and consumers spending money on woolen apparel to further enhance the farmgate price for wool. Next week is the opening sale of the new season with 55,000 bales rostered and exporters struggling to find enough enquiry and finance to buy at the current level. An EMI that can stay above 1400 will be a good result by this time next week.

Southern Aurora Fwd Prices

Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 25th June, 2021

 AWEX Northern Micron Indices Comparison

HAS THE MARKET PEAKED??

The wool market had another positive series to see the AWEX EMI post a 20 cent gain to 1468. This most likely could be the peak as the market did in fact lose 4 cents in the final session from its high point of 1472 cents on the opening day. Showfloor talk amongst the buyers that the top of the market was close was spot on as another frantic start to sales was tempered by the close and the second day saw losses of 5/10 cents for 18.5 to 20 micron whereas 17 and finer still added to their values. By week’s end 18.5 to 22 micron rose by 10 to 25 cents with finer types 35 to 70 cents better with some lots over 100 cents higher. Once again the clearance rate for fleece types was high at 98.4% with just 124 bales not sold. Skirtings enjoyed another good sale as increases of 20 to 40 cents was common for all types in this sector with no hint of a softer tone on the final day. After 5 weeks of rises (totaling 95 cents) the carding sector was just in sellers’ favour to add 2 cents to 978 as the opening day’s gains were barely maintained in the final session. Crossbreds kept pace with their merino counterparts with all microns adding 10 to 30 cents. As mentioned earlier, the EMI gained 20 cents to 1468 and in US$ terms just a 4 cent rise to 1108 due to the FRX rising on Tuesday night but week to week was 0.75% lower with the A$ low point at 74.85 over the weekend with some exporters saying if the FRX didn’t fall the EMI could’ve fallen by 10/20 cents.

With just the 2 East Coast centres operating, this presented the smallest national catalogue since October (33,300). This small volume coupled with the FRX rates favouring exporters was an opportunity for the market to keep forging ahead as it had done for the past 7 sale days (adding 130 cents) but buyers were indicating the market had run out of steam. Shipping issues continue to delay wool on the water and at port thus tying up critical finance to keep buyers purchasing wool. Finances have been stretched for some time with unusually large offerings for winter, financial strain is something buyers have become accustomed to lately. With 3 sales before the winter recess, buyers and their bank accounts are looking forward to the break to replenish themselves and hopefully top up their money pits!

Buying honours were evenly spread amongst topmakers, manufacturers and local traders with the softer FRX helping overseas users in dealing with a similar price in their local currency. Next week sees the final sale of the season with all 3 centres in action with a catalogue of 44,400 bales on offer. Buyers are predicting some sort of price correction to continue on from the final day this week but, to what extent is still unknown. FRX movements will be critical in determining how the market will fare.

Southern Aurora Fwd Prices

Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 18th June, 2021

 AWEX Northern Micron Indices Comparison

1400 DONE AND DUSTED!!!

For the second series running the AWEX EMI added 50+ cents to its value. This has the market on a 5 week ascendency that has seen it climb by 142 cents, 74% (105 cents) of that over the past 2 sales to smash through the 1400 cent mark. It has been a rapid rise from when the market was seemingly stuck between 1300 and 1350 for 7 weeks in April/May. The EMI now sits at 1448 up by 55 cents. In US$ terms the market rose by 25 cents to 1103 as the FRX dropped sharply on Wednesday night to 76.2 cents, back by 1.2%. Increases were across the full spectrum of MPGs: 20 micron and finer recorded rises of 70 to 95 cents with 21s and coarser up to 45 cents dearer as just 89 bales (1.2%) of fleece were passed-in in Sydney. Skirtings saw good gains but not to the extent of their fleece counterparts - all types and descriptions 30/50 cents to the good. The call for more knitwear which continues to dominate the fashion scene saw cardings ascend about the same level as last series with the 3 centres averaging a 26 cent rise as all types in this sector looked to be 20 to 50 cents higher - the MCIs across the 3 centres now at 956 cents. Crossbreds saw some good gains as 26s and 32 micron lifted by 25 cents with 28/30s in sellers’ favour.  Surprisingly the pass-in rate was a fraction higher at 4.6%.

The extra volume of 6,200 bales to 42,500 as Fremantle joined in didn’t dampen exporters appetite for more wool. Some buyers would be happy to take the ‘sit and wait’ approach while others are keen to secure wool for the longer term (late into the year) albeit at just below prompt market prices. There are always buyers that are cautious about pushing the market to “unsustainable levels” but, in the current environment, that looks unlikely as the processing season is historically in full swing. Chinese garment makers are missing the usual lead from European fashion designers and unsure about what colours and styles to proceed with for the up and coming season. Their processing capacity is sitting at about 70% due to a shortage of textile workers leading to the ongoing production and shipping delays that are frustrating retailers and consumers globally. Processors in Europe are busy when compared to last year but, like China, nowhere near full production capacity as their first enquiry is about delivery time then price. Spinners and knitters on the continent are busy with more and more weavers dusting off their idle looms at long last. The northern hemisphere selling season for woolen garments will start in September with consumer confidence and addressing sustainability concerns at the forefront of purchase patterns of consumers when buying discretionary items such as woolen apparel. Fremantle sit out next week’s sale with just 34,600 bales on offer on the East Coast with no talk of the market having a correction yet.

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Main Buyers (This Week)