Weekly Market Reports


3 April 2020

admin Macwool - Friday, April 03, 2020

WEEKLY MARKET REPORT 

Week Ending 27th March, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S40/19

This Week

M40/19

Last Sale

S39/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1743

1706

1883

-140

2512

-769

18

1578

1560

1754

-176

2422

-844

19

1508

1491

1665

-157

2299

-791

20

1463

1471

1632

-169

2277

-814

21 1458n 1465 1609n -151 2268n -810
26 - 951 1081 (M) -130 (M) 1458n (M) -507 (M)

28

703n

731

871n

-168

1205n

-502

30

-

541

680n (M)

-139 (M)

963n (M)

-422 (M)

MC

899n

869n

987n

-88

1101

-202


HOW FAR DO WE LET THIS GO?

We thought we had seen it all over the years, stockpiles, droughts and the like but nothing really compares to, or conditions us to the marketing environment we are presently faced with. All players in our industry, from growers through to retailers, are in a bind and trying to choose between a raft of poor options in front of us.

Firstly, to deal with our own situation, on Monday I called a staff meeting to put a hold on all non essential travel for staff. This means that, unfortunately, we won’t be making shed visits or sending extra staff with clients to wool sales. The woolstore is operating at present as normal with transport so far unaffected and we are still testing wool for sale whilst they continue. Some staff have been asked to take leave and stay at home and some staff have been asked to work from home where possible but our office and store are manned and functioning well. Ian Sharp, who is based in Sydney, is collaborating with other brokers in our group who are also only sending one person to the sale.

The real question that is spinning round the industry is how long should we keep selling for, or how long we will be able to continue selling? There is real pressure mounting, particularly from European processors to call a halt as, whilst we sell into a downward spiral, it continues to erode their inventory positions but they cannot purchase whilst their borders and factories are closed. The same is the case for wool destined for India with Australian buyers sitting on quantities of purchased wool that they can’t ship. There is real fear that, in some cases, contracts will be reneged or renegotiated which will cause severe financial loss to some traders.

Whether we continue to sell or not, in the short term there is no doubt that the wool market is in for a tough trot like many commodities. We don’t know where the bottom is and can’t honestly advise growers whether they should sell now or wait. For those who choose to wait, it could be months before we see an upturn. My view is that we need to continue selling in some form. I’m not convinced that the public auction right now is the best way to do it. There are various private selling options and electronic sale methods currently being trialled. The EMI lost 155 cents this week or nearly 11%. We don’t need too many weeks like that but the major brokers have stated they will continue to sell regardless and allow growers the choice to sell or not and, as we saw last week, those that did decide to sell (which was only about half of the offering) still bore the brunt of a market with no confidence. Would a one, two or three week recess help? I think a brief recess is needed to judge better the global situation and allow traders time to catch up with their finances which are stretched to the limit.

Next week there will be 44,400 bales to be offered and growers need to think carefully about their selling instructions and consult well with their broker. Please keep safe and well, and we look forward to catching up in person when this has past.

         Southern Aurora Fwd Prices            

Micron

Date

Low

21

June 20

1400

Main Buyers (This Week)

1

Tianyu Wool

2607

2

Techwool

2475

3

Aust. Merino

2225

4

Kathaytex

1708

5

United Wool

1618

6

Endeavour Wool

1601


Eastern Market Indicators (AUD cents/kg clean)

1287 cents ê 155 cents compared with 27/03/2020


Northern Market Indicators (AUD cents/kg clean)

1320 cents ê 162 cents compared with 27/03/2020

   

AUD/USD Currency Exchange

0.6129 é 0.0209 compared with 27/03/2020

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