Weekly Market Reports


19 March 2021

admin Macwool - Friday, March 19, 2021

 WEEKLY MARKET REPORT

Week Ending 19th March, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S38/20

This Week

M38/20

Last Sale

S37/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2063

2039n 2117
-54 1848n +215

18

1769

1770

1809

-40

1715

+54

19

1566

1564

1603

-37

1644

-78

20

1350

1366

1405

-55

1628

-278
21 1262n 1283 1307n -45 1632n -370
 26 - 785n 795n (M) -10 (M) 1095n (M) -310 (M)

28

510n

511

520n

-10

871n

-361

MC

864n

903n

880n

-16

1004n

-140

FINANCIAL CONSTRAINTS HINDER MARKET!

The reduction that the market had this sale was what many buyers had thought was coming for a few weeks. The fact that the market had traded in such a narrow band (1318 to 1309) for the past month had surprised many given the large national volumes on offer, the upward shift in the FRX (the wrong way for woolgrowers) and exporter troubles with finance and shipping delays. The AWEX EMI gave back 32 cents to 1277 (2.5%). The fall was less dramatic in US$ terms as the FRX rose to 78.35 cents, up by 0.85 of a cent, the EMI losing 14 cents to sit at 1000 in US$ terms. All sectors of the market fell. Fleece wools lost 35 to 60 cents across the board with only the very best style type with the exact specifications giving back 20 cents. Skirtings followed the fleece pattern of price direction with the better style low VM (< 2.5%) falling by 30/50 cents with all others losing 40 to 60 cents.  Cardings were overall cheaper in Sydney and Fremantle with both MCIs now in the mid 800s with Melbourne gaining 14 cents to lift above 900 cents to 903. Broader LKS were the main offender in Sydney to have its MCI fall by 16 cents to 864 as they lost 30/40 cents with most other types fully firm for the sale. Crossbreds opened the series cheaper but firmed in the closing session to finish the week in buyers’ favour.  The national pass-in rate climbed to 17% as more growers resisted the weaker prices.

This week’s fall marks the biggest downward correction for the year to date. Since the market rose in January the trading band of the EMI has been very tight (1275 to 1318) and we remain in the price bracket despite this sale’s fall. This sale saw the 1 millionth bale sold to the trade this season with 11.5% (106,000 bales) sold to the trade more than last season at the same time with total offerings up by 63,350 bales (5.6%). The overall value of the clip sold this season to date works out to be $1415/bale. The market is 160 cents (11%) lower than the same week last year. The gap was 400 cents before sales started back in January - the gap narrowing due to the big price collapse this time last year as demand fell off the cliff when the market lost 308 cents (1609 to 1301) in the January to Easter period. On the flipside in US$ terms the market has risen by 200 cents from 800 to 1,000 - a 25% increase. This is due to the FRX climbing by 40% from 55.75 to 77.35 and a clear illustration of just how much demand fell away last year when the FRX was very low.

As we alluded to earlier, financial constraints due to shipping delays and the constant run of weekly volumes in the high 40,000s finally took its toll on the market. The cautious ‘money management’ by buyers that led to a stable market finally relented with risk averse purchasing taking over to match the softer demand signals. The problems with delays in shipping wool that is tying up critical finance now flows all the way back to the wool dumps. The dumps are now so clogged up with wool waiting for delayed vessels they are unable to take delivery of wool early. This has led to dumps calling for wool to arrive the day prior to the ship’s cut-off. This means dumping, containerisation and reaching the port has to happen the same day instead of the usual 2/3 day lag time. This means shipping from our end has compressed in time with deadlines for wool down to 1 day rather than the 2/3 day time allowance that was the norm. Shipping companies estimate a 50% fall in the number of container ships in operation compared to 12 months ago. A ship with wool would arrive in China every 2-4 days, now its 1 every 7 to 10 days. Some buying companies have had to go to their banks “hat-in-hand” to get extra funds to buy wool while finance is tied up with wool on water. Market talk is firm for next week.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1250

Main Buyers (This Week)

1

Techwool

6383

2

Endeavour Wool

4019

3

Fox & Lillie

3836

4

Tianyu Wool

3798

5

United Wool

2974

6

Aust. Merino

2382

Eastern Market Indicators (AUD cents/kg clean)

1277 cents ê 32 cents compared with 12/03/2021

Northern Market Indicators (AUD cents/kg clean)

1342 cents ê 33 cents compared with 12/03/2021

   AUD/USD Currency Exchange

0.7833 é 0.0086 compared with 12/03/2021


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