WEEKLY MARKET REPORT

Week Ending 4th September, 2020

 AWEX Northern Micron Indices Comparison

MARKET DIRECTION – ANYONE’S GUESS BUT WHO KNOWS??

The wool market continued on its sorry path downwards this week as little to no new business was written and, as we forecast, the EMI fell below 900 cents. The ascendency of the FRX by over 2.3% to 74 cents certainly didn’t help but the main factor was, again, the genuine lack of demand. Both days saw double digit falls for all types in all sectors. The EMI dropped by a further 71 cents to 858 and, with the stronger FRX, the fall was 37 cents in US$ terms to 631. Merino fleeces lost 65 to 90 cents across most lots with the Best style FNF, sound types up to 30/50 cents lower. Skirtings also took a hammering as losses ranged from 30 to 80 cents. Despite these heavy falls growers were willing to meet the market as just 7% was passed-in. After last sale’s unexpected rises cardings followed the combing types lead to cheapen as well with broader than 17.5 micron STN and CRT 20 to 30 cents back with all other descriptions either side of unchanged. The sorry state of the XB market continued with heavy losses for the finer microns; 26s collapsed by 120 cents in Sydney and 155 cents in Melbourne with all other microns falling by 30 to 50 cents. At just 190 cents (clean) 32 micron are at their lowest point since AWEX records began in 1995. AT these levels most XB fleeces (26 to 32 micron) are only bringing mid 300 cents to low 100s based on a yield of 70%, barely enough to cover shearing expenses.

Local traders dominated buyers’ lists this series with Chinese topmakers and Indent buyers adding some muted competition on the final day. Reports that European wool merchants are nearly all back from holidays and may lift the abysmal levels of enquiry over the next few weeks will be cautiously welcomed but growers shouldn’t be holding their breath. As usual, AWTA released their monthly testing figures this week. A massive 20% less wool was tested in August compared to the same month in 2019 and the progressive total for the season so far is 17% less than last season - 31.4mkg to 38.2mkg. In a surprise figure 11,680 bales (or 6.4%) more have been sold to the trade to date this season than last, this despite the market being a whopping 37% cheaper than 12 months ago and 750 cents (50% cheaper than the opening sale in January). Reasons could be varied for the extra sell-off from paying off feed or farming bills to just quitting their wool before the market gets any worse.

Increased demand will be the only thing that will pull the market out of this rut. A huge concern is the “2^nd wave” of Covid-19 that some countries are experiencing and indeed some countries not getting on top of their 1^st wave. If lockdowns and restrictions are enforced again or extended economic recovery will be even further stalled than is anticipated costing governments $billions extra in stimulus and welfare packages for their populations. More and more protests globally against these harsh restrictions may well lead to governments realising that, for the sake of the sanity of their people and their own political existence, a quicker return to normal life will speed up economic growth and may need the pandemic to run its course till a vaccine is released - the course of action they need to adopt??

        Southern Aurora Fwd Prices            

Main Buyers (This Week)