Weekly Market Reports


5 February 2021

admin Macwool - Friday, February 05, 2021

WEEKLY MARKET REPORT

Week Ending 5th February, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S32/20

This Week

M32/20

Last Sale

S31/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2123

2105 2144
-21 2080 +43

18

1780

1778

1780

0

1943

-163

19

1532

1529

1537

-5

1834

-302

20

1346

1345

1340

+6

1800

-454
21 1243n 1243 1273 -30 1789n -546
 26 795n 799n 785n +10 1091n -206

28

555n

550

531n

+24

819n

-264

MC

898n

908n

906n

-8

1118n

-220

IT’S A BILLION DOLLAR INDUSTRY- OFFICIALLY!

This time last week there was some nervousness about whether the market could hold its ground after a decade long record lift of 134 cents. Fremantle’s close last Thursday saw most categories cheaper and we all thought that we could see a retreat of 30-40 cents. Fortunately this was not to be although there was some softness in patches but we look at 45,126 bales being offered which was over 5000 bales more than the previous week and one can feel reasonably happy with the slight adjustment.

This week gross sales of the Australian wool clip passed the 1 billion dollar mark which it has done every year for quite some time. This year it has taken five weeks longer to reach the milestone than last year which, when all is taken into account, is not such a bad result compared to what might have been when we were looking at the sub 1000 EMI last Spring. Hopefully we can report the 2 billion dollar mark before the end of June.

The export destination figures tell the true story of who is almost singlehandedly pushing this market along. YTD China has purchased 86% of our wool but trade sources of recent weeks say the figure is higher and over 90%. Many are asking should we be nervous about this kind of domination. The simple answer lay in the fact that the other competing destinations are simply not buying and without China who knows where this market may be? Information out of Europe has downstream processors showing year-on-year trading results down between 30% and 65% so orders are just not being placed whilst they trade out of their stock positions. Meanwhile China’s economy which faltered momentarily has rebounded on the back of strong domestic sales, particularly in the prestige apparel end. Wealthy Chinese shoppers are forced to shop at home with borders closed hence a big jump in high end fashion sales domestically. Wool has managed to avoid any of the geopolitical tensions that have affected other commodities. Wool is one of the longest traded commodities with China going back to the beginning of China’s more recent emerging affluence. Wool is a product that has a lot of value adding in China and the textile industry rates second in terms of contribution to GDP. The other helpful factor is that there are many strong, long standing relationships between the Chinese mill operators and the Australian wool industry. These relationships become critical when there is some turbulence about.

A quick glance at the above table far right sees that the gap YOY has completely closed sub 17 micron. In fact they are worth more now than 12 months ago. The 18 & 19 micron sectors are looking a lot better as well but I would be cautious just yet that the medium categories can close the gap too much in the short term. Seasonally we are beginning to see clips over a micron broader than last year so it’s easy to see where there will be some pressure on fine wool coming out of drought. I would not be as hopeful for wool above 19 micron as current production is quite plentiful.

A larger offering again next week will test the market with 52,822 bales being offered. Macwool/Carmichael will offer 1235 bales on Tuesday. Early mail suggests maybe a firm trend.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1240

Main Buyers (This Week)

1

Techwool

7734

2

Endeavour Wool

3945

3

Fox & Lillie

2879

4

Tianyu Wool

2470

5

Kathaytex Aust.

2346

6

United Wool

2290

Eastern Market Indicators (AUD cents/kg clean)

1285 cents ê 6 cents compared with 29/01/2021

Northern Market Indicators (AUD cents/kg clean)

1362 cents ê 7 cents compared with 29/01/2021

   AUD/USD Currency Exchange

0.7616 ê 0.0015 compared with 29/01/2021

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