WEEKLY MARKET REPORT

Week Ending 13th November, 2020

 AWEX Northern Micron Indices Comparison

DAY-TO-DAY VOLATILITY – UNHEARD OF!!!

When looking at the market reports for this week’s sale the barest movement in the AWEX EMI of just one cent ascendency to 1189 would suggest the market was pretty stable, something that both sides have been seeking for some time. A closer look at actually what happened tells a very different story. After the final day’s cheaper trend in the last series (if previous weeks’ patterns were any guide), this week’s market was going to be falling by some major margins. By the time the opening lot was due to be sold this savaging of the market was not going to be as bad as was first predicted with spatterings of business done. Fleece prices ranged from 20 to 50 cents back in the first session (showfloor chatter had the losses between 60/80 cents). The final day of selling brought hope of a recovery as Fremantle’s market barely moved and finished par to 20 cents higher than the Eastern Seaboard prices on the opening day. All centres recorded good gains to finish the sale on a strong note. 18.5s could only manage a 1 cent gain for the week while all other microns rose by 20 to 40 cents and, in some cases, a 100 cent turnaround from day to day in identical types. As mentioned earlier it was just a 1 cent gain to 1189 for the EMI. In US$ terms the rise was 16 cents to 869 due to the global strengthening of the greenback on the US election result. Our FRX was up by 2% to 73.10 cents but this didn’t seem to adversely affect the market. Skirtings finished to the good after the roller-coaster ride like the fleece wools. Finer types < 17.5 finished the sale on a firm note with broader lots 10/20 cents higher than the previous sale.  Cardings, unlike their merino combing counterparts, had failed to recover their opening day’s losses with most types falling by 20 to 30 cents. The MCI gave up 33 cents to 731. This large loss for cardings the contributing factor the EMI could only add 1 cent. Crossbreds also couldn’t recover all the opening session’s losses with 26 micron and finer unchanged and broader microns back by 20 to 30 cents for the sale.

The volatility continues unabated not from week to week but, for the past 2 sales, day to day. The wool trade is no stranger to big price swings and volatility but the magnitude of the recent price movements has been on a scale that even veterans of the trade have not seen. This is indicative of current strategies of minimal to zero risk appetite of stock of forward exposure by both seller and buyer. The sudden change in sentiment late in the opening session saw a good recovery in most sectors led by renewed Chinese enquiry seemingly, for the moment, shrugging off the worry and fear that wool could be caught up in trade embargos between our two countries that is involving a raft of exports and uncertain future for some commodities. AWTA figures for October were released with an 18% fall in weight of wool tested when compared to the same month in 2019. The progressive total for the season (July to October) is back by 11.4% (10.8mkg less), 84.8 to 95.6mkg. The amount of wool offered is slightly lower than last season - 8,620 bales (1.6%).

The news of the likely outcome of the US election and, more importantly, news of several vaccines having a 90% success rate in trials being conducted and release dates either side of Christmas sent stock markets and commodities climbing as infection rates in the US climb and Europe is trying to combat the 2^nd wave with another round of restrictions and lockdowns. The mass release of a vaccine can’t come quick enough. 40,000 bales are on offer next week and, if futures trading is any guide, firm to 20 cents higher is the most likely outcome.

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Main Buyers (This Week)