WEEKLY MARKET REPORT

Week Ending 26^th January, 2018

 AWEX Northern Micron Indices Comparison

CARDINGS & CROSSBREDS HIT THE WALL

Our worst fears were realised this week as sectors of the market came off historical highs in an historical fashion. Not since 1997 has the carding market retreated so swiftly where locks, in particular, ended the day up to 250 cents cheaper yesterday. No one was prepared for the extent of the fall, buyers included. Our sources told us that a drop of 30 - 40 cents clean over the week was expected and factored in but, as the week progressed and buyers’ credit facilities expired, the market had only one way to go. Pass-in rates for cardings and crossbreds ranged between 20% and 33% across the three centres with brokers’ pre sale valuations suddenly looking grossly optimistic.

Merino fleece wools, particularly well measured lots, held their ground fairly well as did the lower VM pieces and bellies.

High VM and high mid break lines came under increasing pressure on Thursday and poorly prepared clips, particularly XB wools, received little buyer interest and were noticeably cheaper.

The run up to Chinese New Year typically sees a slow down in shipping and a softening market that is usually felt a few weeks out. The concern now is that this pull back has happened a week or two early as Chinese New Year isn’t until Feb 16-23. Chinese orders began to slow last week and it was felt that a moderate fall would have seen orders move again and the market would have stabilised. Now we have a situation where they may well sit on the fence and see how much further the market can fall, particularly with merino cardings which were so historically high.

It’s a tough decision to make now whether we are better sitting it out or sell into a falling market. Our sources tell us that with oddments there is plenty of room for downside movement and we would be better off having these wools sold.

Overall though, the merino market outlook is still very positive and good types should hold reasonably well and could improve after Chinese New Year. A slightly different story for the XB sector as these wools haven’t performed well for quite some time now and this week’s falls made that situation worse. It may be some time before these types gather any real momentum, particularly the coarser end.

To put all this in perspective the 36,430 bales sold this week averaged $2014 a bale so it’s not all doom and gloom. Next week a similar offering of 42,244 bales will be offered with Macwool on day one with 989 bales.

Main Buyers (This Week)