WEEKLY MARKET REPORT

Week Ending 21st August 2020

 AWEX Northern Micron Indices Comparison

DEMAND FALLS - MARKET SLIPS UNDER 1,000cents!

Last series’ small glimmer of hope that the consolidation of merino fleece prices may have finally signaled an end to falling prices and the AWEX EMI staying above 1000 cents was not to be. Another sharp correction across all sectors this week dashed any hope that the market could sustain prices above the 1000 cent “psychological” level at which many in the industry had probably hoped more than predicted  that the market would not fall under. The EMI lost 59 cents to 945, a 6% fall, now its lowest level since October, 2012. The fall was 30 cents in US$ terms to just 685 as the FRX ascended to 72.50 cents, up 1.25 cents for the week and its highest point since February 2019.

From the opening lot prices softened on all types in all sectors. Merino fleeces fell by another 30 to 75 cents with very little premium for NM lots or FNF types. Skirtings also suffered big losses as 17s and broader (regardless of VM) fell by 20 to 80 cents with superfine types < 3% VM just into buyers’ favour. After their big fall last week cardings also were cheaper but didn’t suffer losses like the previous series. All types in this sector fell by 20 to 35 cents. Crossbreds were the sector to suffer the biggest hit. 27 micron and finer collapsed by 80 to 140 cents while all other microns gave up 30 to 70 cents. 42% of the crossbred offering was passed-in in Sydney. Once again large European top-maker, Modiano, was the dominant buyer for this sector snapping up 27%, perhaps the only exporter to see value in these low price wools.

The market’s large fall saw pass-in rates soar to 26%, up from just 8% the previous sale, to see just 24,600 bales sold to the trade from the 33,100 offered but even this small quantity couldn’t be met with enough demand. The almost 2% upward shift in the A$ didn’t help but was by no means the sole contributing factor to the downward spiral the market is experiencing at the moment. Chinese topmakers dominated the merino combing sector but under limited competition especially for “off types” and the dwindling volume of dusty low yielding wools. Local and overseas traders fled to safety  as incomplete or easier traded types came under buyers’ scrutiny but the distinct lack of new business once these few outstanding orders were filled saw a few buyers barely bid and the market fell as no-one is prepared to buy “on spec’ in the hope of selling that wool post purchase to downstream users. Speculation has completely gone from the modern day traders psyche. It seems no buyer is risking purchasing any quantity of wool that hasn’t been sold on down the processing pipeline. It’s interesting to note 1.2% more wool has been offered to date this season than last and 7% more has been sold even though the market is a massive 37% cheaper. Just the 2 eastern seaboard centres are in action next week with 22,300 bales on offer. In this demand-poor climate, this may be too much wool.

Southern Aurora Fwd Prices            

Main Buyers (This Week)