Weekly Market Reports


16 October, 2020

admin Macwool - Friday, October 16, 2020

 WEEKLY MARKET REPORT

Week Ending 16th October, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S16/20

This Week

M16/20

Last Sale

S15/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1777

1732n 1626
+151 1898 -121

18

1543

1532

1402

+141

1850

-307

19

1309

1304

1195

+114

1763

-454

20

1177

1160

1069

+108

1722

-545
21 1140n 1145 1030n +110 1712n -572
 26 753n 748 693n +60 1160n -407

28

520n

515

484n

+36

899n

-379

MC

763n

754n

732n

+31

987n

-224

HOW QUICK THE SENTIMENT CAN CHANGE!!

The market exploded into action this week as buyers were desperate to secure wool from the opening lot to the final fall of the hammer in Fremantle on Wednesday. It was tipped to be a sedate series late last week with most good judges talking a firm market to sellers. Favour changed late on Friday when the enquiry started from China and kept coming all weekend. As one buyer said, “we got smashed,” with agents keen to book up any type of wool. Futures pointed to gains of 40 cents and the market didn’t disappoint as the AWEX EMI climbed by 44 cents on the opening day. This was followed by even higher rises in the final session (51 cents) to finish the week at 1117, a rise of 95 cents (9.1%). The rise in US$ terms was almost as impressive - a 74 cents gain to 801 - despite the FRX ascending by 0.65% to 71.75 cents. All fleece types were swept up in the dash to secure quantity as all microns climbed by 110 to 150 cents regardless of any discounts on faults. Some of the better superfine (< 18 micron types) were up 200+ from last week’s quotes. Just 36 bales of fleece were passed-in in Sydney - a clearance rate of 99.25%. The skirting sector performed just as good with all types across all microns adding 3 digits to last week’s values. Finer than 18.5 rocketed up by 130 to 180 cents while the broader microns added 110 to 150 cents. Once again, growers liked the new price levels as just 10 bales (0.6%) failed to sell in Sydney. Cardings also enjoyed price rises but not quite to the extent of their combing counterparts. All types < 17.5 micron lifted by 90 to 120 cents while the broader wools were 30 to 60 cents to the good as the 3 MCIs now range from 788 to 754 cents. Crossbreds, like the carding sector, didn’t have the hype of the merino combing wools but still rose 50 to 70 cents for 27.5 and finer and 30 to 40 cents for the coarser types.

Traders were again the dominant force in pushing the market up with 1st stage manufacturers appearing in the top 5 buying positions for merino skirtings and cardings. Risk mitigation is key in these trying times and the buy and sell prompt methodology is working in favour of the inventory building traders. The frantic enquiry over the weekend and the steep opening session’s price rises didn’t deter Chinese mills from baulking at the new levels which could form a basis for the foreseeable future. One buyer told us every bale they bought on Tuesday was sold by 7:00 that night. The EMI now sits just 7 cents below the Sale 2 level with < 19 micron all higher than in July - before the rot set in when sales resumed in August. Since the resumption the market has collapsed and then recovered 276 cents, most of that over the past 6 weeks. Fremantle had its largest daily gain (113 cents) since September 2019.

Whilst the news of this current price recovery and a possible “floor” in the price is welcome, there is still a long way to go before we can assume all is good with the wool market. Many global factors will influence market direction. The geopolitical nature of the Pacific rim is a concern for all countries when trade is mentioned. As Australia has seen recently diplomatic tensions have led to bitter trade tensions between China and Australia that have seen crippling tariffs placed on our wine, barley and beef exports into China. The latest victim looks to be cotton (an $800m export market) with Chinese mills told not to buy Australian cotton with the threat of a 40% tariff being imposed. Cotton millers are given an import quota each year and have been told they may not receive this allowance if they continue to buy our cotton. Worrying times indeed.   

Futures have traded at a good premium to the spot price indicating another good market next week.


                                                   Southern Aurora Fwd Prices            

Micron

Date

Low

21

Nov/Dec 20

1110

Main Buyers (This Week)

1

Endeavour Wool

4,263

2

Australian Merino

3,103

3

Techwool Trading

2,578

4

Fox & Lillie

2,350

5

PJ Morris Wool

1,611

6

Tianyu Wool

1,169

Eastern Market Indicators (AUD cents/kg clean)

1117 cents é 51 cents compared with 13/10/2020

Northern Market Indicators (AUD cents/kg clean)

1184 cents é 56 cents compared with 13/10/2020

   AUD/USD Currency Exchange

0.717 é 0.0004 compared with 13/10/2020

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