Weekly Market Reports


10 June 2016

admin Macwool - Friday, June 10, 2016

WEEKLY MARKET REPORT

Week Ending 10th June, 2016

AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S50/15

This Week

M50/15

Last Sale

S49/15

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1532

1512

1574

-42

1618

-86

18

1507

1487

1553

-46

1578

-71

19

1465

1451

1506

-41

1521

-56

20

1405

1403

1436

-31

1478

-73

21

1377

1374

1404

-27

1469

-92

22

1365n

1370

1386n

-21

1426n

-61

26

1070n (M)

1070n

1096n (M)

-26 (M)

1165n

-95

28

793n

781

821n

-28

971

-178

30

705n

699

715n

-10

865

-160

MC

1087

1093

1111

-24

1112

-25

AUSSIE DOLLAR JUMPS AND SPOILS THE PARTY!

 The only good thing about the past week has been the rainfall over a big area. As far as the wool market is concerned what everyone had feared, happened. The EMI fell 26 cents to 1270, the first downward shift in 11 selling days but saw a 9 cent gain to 948 in US$ terms - this due to the wild movements of exchange rates. The A$ took a run up to 75 cents at one stage giving the buyers what they wanted - a reason to pull back prices. Despite the smallest offering in 12 months (27,200 bales) this was not going to be enough to prevent the market from falling. The opening day saw heavy losses across the board with some indicators actually firming up on the final day. Losses were felt more in the finer microns <19.5 giving up 35 to 45 cents as tender and less stylish types were most affected with the “Spinners” style and better holding previous sales levels. 20 micron and broader weren’t as adversely affected falling by 20 to 30 cents. The volume of VM is still dictating price as just 44% of the fleece catalogue (16,500 bales) on offer was below 1%, the lowest for the entire season.

Room 2 saw all descriptions fall as well. Skirtings saw falls of 10 to 15 cents for types <3% VM while burrier lots in the 5 to 8% VM range looked 30 to 40 cents cheaper. Crossbreds also fell out of favour as losses of 10 to 30 cents across the board looked to be the quote by the end of the sale. Cardings couldn’t maintain their good recovery of the past 5 sales with both MCIs on the east coast now below 1100 cents. All types in this sector gave up 20 to 30 cents from last week.

Currency again played a pivotal role in the demise of the wool market this week. Poor job growth figures in the US for May (38,000), the smallest in 6 years, saw the US$ fall against all major currencies as this figure was well below predicted forecasts as the expected rate rise in the US now looks unlikely at the end of June, but locked in for July. The A$ went to 73.65 cents on this news. The rot set in even further on Tuesday as the RBA announced, as expected, no change to rates here to push the A$ above 74 cents just in time for this week’s wool sales. The A$ did peak at 75 cents briefly on Wednesday night but has softened to low 74 cents this afternoon - this from a low point of 71.55  late in May, just  a week ago!!

This week was a clear demonstration of how sensitive exchange rates can be to economic news, be it good or bad. The sudden  volatile shift of the A$ caught everyone by surprise as the pass-in rate climbed to 13% as just 23,600 bales were cleared to the trade. Price levels for most types are still good, bar finer than 19s where over-supply and high VM that affects style is still a problem. The 19 to 23 micron indicators are running at 86 to 94% over the past 5 years (the market has only been higher than these levels 14 to 6% of that time period) as is the MCI sitting at 89%. Fundamentals have not changed in the past week. Despite the market’s hiccup, supply is low and demand is still good. Fremantle comes back on board next week as the national catalogue will be around 34,000 bales. We sell first up on Wednesday with 1200 bales on offer. Hopefully currencies will be stable allowing traders to book up wool without the fear of getting burnt by these erratic shifts in currency.

Ag Concepts Fwd Prices at 10 June 2016

Micron

Date

Low

High

19

26-Oct-16

1410

1410

 

Main Buyers (This Week)

1

Techwool

3332

2

Aust. Merino Exp

2472

3

Chinatex

2320

4

Lempriere (Aust)

2217

5

Fox & Lillie

1928

6

Tianyu Wool

1336

7

 PJ Morris

1069

8

Kathaytex Aust

957

9

New England Wool

538

  

Eastern Market Indicators (AUD cents/kg clean)

1270 cents ê 26 cent compared with 3/06/2016

Northern Market Indicators (AUD cents/kg clean)

1292 cents ê 31 cents compared with 3/06/2016

AUD/USD Currency Exchange

0.7267 é 0.0219  compared with 3/06/2016

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