WEEKLY MARKET REPORT

Week Ending 25^th May, 2018

AWEX Northern Micron Indices Comparison

CAN THE EMI CRACK 2000???

The market kept marching towards new records this sale as the AWEX EMI closed in on the 2000 cent mark finishing this series at 1983, a 40 cent appreciation from last sale. The rise was just as good in US$ terms gaining 39 cents to 1501 as the FRX swayed in the 75 cent range all week - this morning at 75.70 cents. A few buyers thought the frantic rises over the past 2 weeks would steady to have a market that could be slightly cheaper given the rapid rises we have seen. That wasn’t the case as the market had similar gains on both days to see all microns add 50/70 cents regardless of style, yield or VM.

Skirtings weren’t to be outdone either as all types and descriptions were rock solid with 18/19 micron up to 5% VM lifting by 30 to 40 cents. Cardings kept up with the combing sector of merinos with the 3 centres averaging 30 cent rises as all types added 20 to 40 cents to their previous values as the only weeks the MCIs have been higher was the pre-Christmas sale and the 2 opening sales in January. Crossbreds kept the same pattern as the few previous sales, < 26 micron up to 40 cents dearer, 28s and broader 10 cents off the pace.

Another record breaking sale as 17.5 to 22s are at all-time record levels. The EMI is 33% (488 cents) higher than a year ago and a massive 691 cents (53%) better than this time 2 years ago. Since Easter the EMI has rallied by 211 cents. All the talk is about quantity, the lack of it now and the looming tighter supply in the spring and into next year as the crippling drought gives no signs of letting up. The past 3 sales and the next 3 will see an average of just 32,000 bales/week, far below the quantity needed to supply the current levels of demand. This week and next has Fremantle holding 1 day sales then missing a sale to add to exporters’ woes about supply. The highlight of the recent gains has been the 19.5 and coarser microns as the gap between 19 and 22 is averaging 95 cents across the 3 centres - the gap at Easter was 180 cents.

Can the demand be maintained and higher costs passed down the pipeline all the way to the retailer?? The short term answer might be yes but long term, “who knows”. Plenty of growers heard the country hour interview where one Chinese processor was very confident through till spring and word from some fine wool processors that all is good in the sub 19 micron sector. Just 31,000 bales up next week. Will the EMI crack 2000 cents??                   

                        Ag Concepts Fwd Prices as at 25 May, 2018

Main Buyers (this week)