24 August 2018

WEEKLY MARKET REPORT

Week Ending 24^th August, 2018

AWEX Northern Micron Indices Comparison

AWEX INDEX	This Week S08/18	This Week M08/18	Last Sale S07/18	Sydney Change	Last Year Sydney	Sydney Yearly Change
17	2917	2915	3007	-90	2274	+643
18	2617	2589	2682	-65	2169	+448
19	2393	2386	2465	-72	1862	+531
20	2303	2291	2376	-73	1663	+640
21	2280	2269	2341	-61	1640n	+640
22	2259n	2265	-	-98 (M)	1532 (M)	+733
26	1489n	1538n	1507	-18	1149n	+340
28	930n	970	944	-14	883n	+47
30	-	711	736 (M)	-25 (M)	660 (M)	+51(m)
MC	1526	1534n	1515	+11	1102	+424

ERRATIC UPS AND DOWNS FRUSTRATE GROWERS

The fickle and erratic nature of the wool market has been no more evident than over the past 2 sales. After the sky-rocketing ascendency of prices last sale (the largest weekly rise in 16 years) the market retreated almost as rapidly on the opening day of this week’s sale. It was a market of 2 complete contrasts from buying wool like there was “no tomorrow” in sale 7 to drawing bids from exporters this week was like “pulling teeth”!! The market collapsed from the opening lot. Losses ranged from 35 to 90 cents in the opening session to a day of consolidation to end the series where 19.5/20 micron were the only microns to suffer as all microns retreated by 60 to 95 cents for the week. By week’s end the AWEX EMI gave up 48 cents to fall back to 2068. As the FRX appreciated for its low point of 72.55 a week ago to mid 73 cents, this saw the EMI fall just 18 cents in US$ terms to 1519. No micron or type was immune from the massive change in buyer sentiment as discounts for faults opened up to excessive levels as some good spec types did perform well, outdoing their indicators by up to 40 cents but some lots were well shy of their value (100 to 150 cents clean) as we passed-in 33% of our fleece offering.

Skirtings followed a similar pattern to the fleece wools - an opening session fall of 30 to 40 cents for all types and styles regardless of VM, colour or other faults only to finish the sale on a solid note. Cardings were the only sector to end the sale in positive territory, the MCI up by 11 cents to 1526 due to LKS and CRT going ahead by 10 to 40 cents. We had a line of LKS from Tottenham make an incredible 1158 cents (1812 cents clean). Crossbreds were also caught up in the negative tone as losses ranged from 15 to 25 cents.

The rapid descent of the market after the vertical rises of the previous sale caught growers and brokers by surprise as no-one was talking of a correction let alone the magnitude of this week’s fall. Quantity was vastly reduced as only the 2 east coast centres were in operation with 29,700 bales on offer and the lift in the FRX wasn’t considered to be a factor in market movements. The Australian Wool Production Forecasting Committee met and has reviewed its forecast for the 2018/2019 season. After considering industry data and seasonal conditions the committee now predicts shorn wool production at 320mkg – a drop of 5.7% since its April forecast. This may force buyers to supply-driven pricing rather than demand-driven expectations. More volatility like the past 2 sales could become commonplace. Some good judges think medium microns, 19s and broader, have conquered their Everest but finer types < 19 micron may still improve; only time will tell. Fremantle rejoins the selling roster next week with just 35,000 bales on offer.

Ag Concepts Fwd Prices as at 24 August, 2018

Micron	Date	Low	High
21	19-Sep-18	2280	2280

Main Buyers (this week)

1	Seatech Ind.	2955	2	Fox & Lillie	2650	3	Techwool	2455
4	Aust. Merino	2227	5	Kathaytex	2182	6	Lempriere	1618
7	Tianyu	1583	8	PJ Morris Wool	1361	9	New Eng. Wool	1304

Eastern Market Indicators (AUD cents/kg clean)

2068cents ê 48 cents compared with 17/8/2018

Northern Market Indicators (AUD cents/kg clean)

2117 cents ê 46 cents compared with 17/8/2018

AUD/USD Currency Exchange

0.7344 é 0.0082 compared with 17/8/2018

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Weekly Market Reports

24 August 2018

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