WEEKLY MARKET REPORT 

Week Ending 24th May, 2019

 AWEX Northern Micron Indices Comparison

MARKET FALLS SHARPLY BUT BOTTOM IS IN SIGHT!!

Further negative sentiment from buyers saw the market retreat even more as the AWEX EMI lost 60 cents to 1833 and 49 cents in US$ terms to 1261. These indicators are now 150 and 241 cents behind levels from this time last year, 7.5 and 16% lower with the A$ 9% less at 68.7 cents. The major decline in the market was on the opening day as sentiment steadied on the final day. All micron indicators fell sharply, 40 to 80 cents with the familiar pattern of better style, low VM and the odd non-mulesed lot selling at market rate or up to 50 cents clean better with the tender, burrier, low yielding types getting smashed by up to 200 cents.

Skirtings also bore the brunt of poor buyer sentiment as low   VM fine types fell 50 to 70 cents while burrier lots gave up 70/100 cents. Cardings weren’t immune from the falling market either as all types lost 20 to 60 cents. The shine has certainly come off the XB sector after its stellar run since January. 26 to 28 micron lost 100 cents while 30s and < 26 fell 50 cents. This equates to a 219 cent (14%) collapse for 28s over the past 2 sales.

All the problems that led to the market falling last week are still well and truly in place. The lingering trade dispute/tariff war between the US and China is the major factor contributing to the slowdown in the Chinese economy and a sudden dip in their consumer confidence is flowing through mills reluctant to purchase wool as price pressure is mounting from manufacturers and retailers that are struggling to move dearer stock of fabric, garments and yarn that is building up in volume. Costs have also become dearer at early stage processing with scouring costs escalating with more water needed to combat the dustier wools and higher wastage costs incurred.

In response to their economic slowdown the Chinese government has loosened monetary policy ie lowering interest rates on consumer debt (mortgages) and devaluing their currency (Renminbi) against the US$ which has fallen sharply since tariffs were raised to 25% making Chinese exports to the US cheaper.

The EMI has fallen 120 cents (6%) over the past 2 sales. Even with a favourable FRX rate, the A$ at its lowest point since the GFC and weekly offerings under 30,000 bales the market has suffered. Let’s hope the steadier market on Thursday is a signal that we’re at a level where new business has been written and prices ascend!!

Ag Concepts Fwd Prices as at 24 May, 2019

Main Buyers (This Week)