WEEKLY MARKET REPORT

Week Ending 2nd November, 2018

 AWEX Northern Micron Indices Comparison

NEXT WEEK ... THE RECOVERY??

Hope that the change of fortunes in Fremantle last Thursday could be a trigger for a market recovery were short lived as the falling market accelerated as the sale progressed. All 3 centres recorded double digit losses (20/30 cents) as the AWEX EMI peeled off by another 20 cents (1%) to 1854. Losses were consistent across all microns, 15 to 30 cents as again buyers struggled to cope with the large volume of drought-affected, fine, low yielding and tender types coming onto the market as growers dug their toes in to pass-in 16% of the national fleece catalogue.

The skirting sector was the best performer of any as losses were kept to the barest minimum as all types and descriptions were quoted as “in buyers favour”. Cardings again bore the brunt of buyer resistance as heavy losses over both sale days saw the MCI shed 98 cents in Sydney to 1045, a whopping 518 cents from the record peak of 1563 in early September. Growers were caught out by the magnitude of the losses as the clearance rate was only 73%. Crossbreds also looked to escape the big losses of the past few sales as most microns gave up 10 to 20 cents.

Another tough sale as the market fell but did perhaps mask an underlying change of sentiment as the fall in A$ terms can be somewhat attributed to the ascending FRX, up by 0.75%. The 3 other main currencies (US$, Euro and the Chinese Yuan) that are used in wool trading prices were unchanged to buyers’ favour. Demand was stronger from the outset and the only real problem is still the over-supply of sub 18.5 micron types not suitable for European manufacturers but buyer interest is on the up as the price gap between these and 19s to 21s is only 110 to 160 cents compared to 170 to 230 cents at the market’s peak in August making these finer microns good value when compared to their broader cousins.

These past few sales have demonstrated that “demand is still king” above all else. Factors like supply, FRX and quality all play their part in price determination but demand is the no.1 factor that dictates price movements and, if demand isn’t there, prices will fall no matter how much other factors are or are not in play. The “demand” component that goes all the way to the retailer has manufacturers worried that consumers will be able to afford these dearer price levels for the Northern Hemisphere winter collection which is in stores now.

The shrinking quantity is again in the news as the latest AWTA figures released for October showed a fall of 5.9% from  October, 2017, and the progressive total for the season (July to October) is back by 9.7% (102.7mkg) to 118.8mkg compared to last year. This equates to 93,700 bales less offered this season than last, more than 2 selling weeks. Hopefully the market can take a turn for the better next week!!! 

Ag Concepts Fwd Prices at 2 November 2018

Main Buyers (This Week)