WEEKLY MARKET REPORT 

Week Ending 17th May, 2019

 AWEX Northern Micron Indices Comparison

MARKET FALLS. UNCERTAIN TIMES AHEAD!

The stalling market last sale turned into a full blown collapse this week as the fears that a lot of processors not being able to pass on the higher wool prices to downstream users finally caught up with growers. Manufacturers and retailers are seeing more and more resistance from consumers for the higher priced garments - this wool being purchased over a few peaks in the market that now were deemed as unsustainable through the pipeline. Adding to the sour sentiment is the ongoing trade tension and increased tariffs on Chinese goods exported to the USA. Demand has been lowered by current price structure and the trade war and weaker global growth. China buys 75-80% of our wool and consumes half of that with the USA - a big purchaser of tops, yarn and finished goods.

Losses were across the full spectrum as the EMI lost 59 cents to 1893, its lowest point for six months. All merino indicators lost 50 to 70 cents with the poorer style types up to 120 cents behind these new price levels with some lots 200 to 300 cents clean down from their original valuation. Skirtings lost 40 to 50 cents. Cardings also bore some savage losses. STN fell 70/110 cents, LKS 20 to 30 while CRT remained unchanged; the 3 centres averaged 44 cent falls. Crossbreds took some big hits also.  Most XBs have climbed by 50% since Christmas but this came to an abrupt halt this sale. Losses ranged from 110 to 145 cents in Melbourne for 26 and 28 microns (10% falls). The national pass-in rate escalated to 22%.

This week’s falls came as FRX rates favoured the A$, now 69.15 cents and small volumes are being offered. This does not always guarantee a rising market. The US/China trade dispute flared up this week as the US announced a 25% import duty to be imposed immediately on US$200 billion of products from China, up from 10%. Included is greasy and semi-processed wool, yarn, fabric and carpets but not wool clothing. China retaliated with its own 25% tariff targeted at agricultural products. News came through late last Friday on the lifting of the ban of South African wool exports to China. Scoured wool can be imported and greasy wool is subject to temperature conditions as the FMD dies over time dependent on the temp, the higher the temp the quicker it dies. Just 25,000 bales are on offer next week but, unfortunately, we may see more of the same.

Ag Concepts Fwd Prices as at 17 May, 2019

Main Buyers (This Week)