WEEKLY MARKET REPORT

Week Ending 13^th May, 2016

AWEX Northern Micron Indices Comparison

MARKET CONTINUES BUT FOR HOW LONG?

 For the 3^rd sale in a row the wool market added more ground, albeit at a slowing pace. The benchmark AWEX EMI rose by 19 cents to 1287, a level that is now 2^nd by 17 cents to the seasonal peak set in August (1295). Again in US$ terms the movements were minimal, a fall of just 6 cents to 945 again influenced by the volatility of exchange rates. Momentum was at its peak in the finer microns, <19 finding 25 to 35 cent lifts and up to 50-70 cents better for the <1% VM, 70% yielding lots in the best topmakers and better style types that are diminishing in volume. 21 to 23s and 19.5 added 10 to 20 cents while 20s had a quiet sale (up by 5 cents) discounts again shrinking for tender, colour, cott and VM.

Room 2 types performed just as well, if not better, in some sectors. Skirtings moved ahead with VM levels dictating the degree of price gains. As is the case with the fleece types smaller volumes of low VM types <3% caught most of the buyers’ attention, dearer by 35 to 40 cents as the broader and burrier lots were quoted 10 to 20 higher. Cardings continued their recovery in rapid fashion this week as a big jump of 40 to 50 cents for all types: emphasis on the scouring lots rather than the carbonising types, again VM playing its part in price determination, these rises had it as the best performer of any sector. It has been a remarkable fightback since the 60 cent loss 3 sales ago now clawing back all those losses and then some. Crossbreds also benefitted from renewed competition as finer types under 26 micron saw gains of 30 to 40 cents, 28s rose 10 to 15 while broader lots were in sellers’ favour. A big reduction in quantity would also be helping as volumes have dropped to 10% to 15% on the east coast in this sector, half of what they were pre Easter.

Again, the dominant factor in the market’s dearer trend was the exchange rate volatility: in local terms a 2.2% positive move, the wool market reacting with a more subdued 1.5% gain. Another hefty fall of almost 2 cents to 73.15 on Wednesday was enough to see buyers continue their strategies of the past few sales. The relative stability in US$ terms over the past month (939 to 959) has helped the market, the swing much larger for the AWEX Indicator, 1217 to 1287 cents. As mentioned earlier the low VM types are coming under heavy scrutiny as volumes fall. The increase in burr has been more so this year due to a big clover season last winter. For all fleece wool offered this week (21,000 bales) 24% was over 2% VM - a 2 year high. 

With the increase in prices, so does the quantity on offer. Next week’s volume has grown 13% to 41,500 but this should not hinder demand or trigger a price correction, the key player will again be the exchange rate.

                                            Ag Concepts Fwd Prices at 13 May 2016

Main Buyers (This Week)