WEEKLY MARKET REPORT

Week Ending 2^nd June, 2017

AWEX Northern Micron Indices Comparison

BUYERS BACK ON TOP!

The market continued to drift as buyers were happy to let the market fall to levels that they could write new business. Where these new levels are is still an unknown. Losses over the series resulted in the EMI retreating by 23 cents to 1472. In US$ terms the fall was larger - 34 cents to 1088 - this due to the FRX rate dropping by over 1 cent to 73.85. Losses were similar to last sale, finer than 19.5 took the brunt of the falls 50 to 85 cents while 20s lost 25 cents and broader types were actually in sellers’ favour by 10/15 cents. Only the very best finer types escaped unscathed. We had some very handy lots from Goolma (17.5 to 18.3) make 100 cents above their indicators all bought by an Italian processor.

The skirting market suffered a similar fate to their fleece counterparts. Only the very best types attracted any semblance of buyer support to finish just off the pace while burrier lots 4 to 10% VM were quoted 40 to 60 cents lower and more for lots with jowl, cot and colour. Carding types remained solid with no real change in Sydney and Fremantle as Melbourne’s MCI lost 24 cents making all 3 centres now within 22 cents - 1199 to 1177. Crossbreds also looked to tread water as 26 micron and finer gained 10 cents while the middle microns were unchanged and broader types solid to 30 cents down.

The market’s losses now extend into its 4th week or 7 selling days since early May when the EMI peaked at 1549. The drift has accelerated over the past 2 sales to see the EMI at 1472 - a 77 cent fall since that peak. The dwindling national offerings that have averaged 33,000 bales over the past 4 weeks and the favourable FRX rate have done nothing to help the market. According to most buyers, selling tops finer than 19.5 micron has almost become “mission impossible” except for the Italian types, as the large price falls in these micron ranges illustrates over the past 4 weeks that range from 150 to 200 cents taking us back to pre Easter levels, but still 200 cents to the good from the sales resumption in January and up to 500 cents better than the same time 12 months ago.  

According to most exporters all sectors (bar 19.5 micron fleece and finer) are not too difficult to sell as can be seen with the levels that broader fleece, cardings and crossbreds are holding at. The Northern Hemisphere, especially China, is hitting the traditionally slow retail demand period of early summer as manufacturers can afford a “wait and see approach” with their purchases as can be seen with the finer microns taking the brunt of slacker demand.

Next sale sees a further reduction in the national catalogue with just 25,000 bales on offer on the east coast. Some reports suggest the market is struggling to come to terms with a pricing strategy for the upcoming autumn/winter Northern Hemisphere, in particular sub 19 micron as the prices are at historically and relatively high levels but manufacturers will have to ramp up production come spring for that period to cater for an increase in retail activity. 

Ag Concepts Fwd Prices at 2 June 2017

Main Buyers (This Week)