WEEKLY MARKET REPORT

Week Ending 5th March, 2021

 AWEX Northern Micron Indices Comparison

FALLING AUSSIE DOLLAR SAVES THE MARKET!

Stability looks to have set in for the wool market as this week’s sale produced just a 4 cent gain to 1310 cents. This follows on from the previous 2 series where the market has fluctuated by only 12 cents (1318 to 1306). All the pre-sale talk was for a cheaper market with the FRX reaching a 3 year high to climb above 80 cents (twice) which could’ve had the market on the back foot to the tune of 30/40 cents. Fortunately the A$ retreated to low 77 cents on Friday, this allowing buyers to stay in the game and do sporadic volumes of business to have a market that was just in sellers’ favour. With the falling FRX the market, in US$ terms, shed 20 cents to 1020. Sydney’s market wasn’t as positive as Melbourne’s with most microns either side of fully firm apart from 18 to 19 micron which shed 10 to 15 cents. Skirtings faded in the final session to finish the sale 10 cents cheaper. Cardings halted their run of 4 cheaper weeks with the MCI adding 10 cents to 869 as most types in this sector posting gains of 10 to 20 cents with < 17 micron lots up to 40 cents to the good. Crossbreds also had a solid sale with broader types > 27 micron fully firm and finer lots 10 to 20 cents higher. Australia’s biggest buyer and trading company (Techwool) dominated buying lists for most types with solid competition from topmakers and processors alike. Growers certainly warmed to the stable market as the passed-in fell by 9% to 9.3% with XBs still the biggest contributor to passed-in wools.

The fall in the FRX produced a scenario that sustained the current price levels despite a not-so-ideal retail economy. The softer FRX gave overseas mills and processors a cheap buy in price if operating in US$ or Chinese Yuan (CNY). The price advantage added up to 2%. As we have mentioned recently the logistic delay in shipping wool to its final destination is restraining buyers financially with additional business unable to be written. Knocking back new business due to financial constraints is nothing new but is just part of the business with the delays in shipping and therefore payments representing 2 weeks of exporters normal auction buying budgets, thus hampering further gains the market might have had with quicker finance available.

Much has been written in various media outlets recently regarding premiums for non-mulesed wool and the demand for it. Nearly all demand is coming from Europe and, with that sector of the market still a long way from being fully operational, premiums were and still are sporadic at best. Some media outlets reported “good premiums” of 20/30 cents being paid recently. A 1 to 2% premium can hardly be called that in most cases.  Most growers with non-mulesed wool are being urged to join a quality scheme called RWS (Responsible Wool Standard). More and more orders that request NM wool are specifying RWS certification as well. One grower who we sold wool for this sale looked to benefit from being in this scheme as the premiums ranged from 80 to 200 cents clean for the fleece wool that averages 4 to 5% VM. This amount of burr would attract a discount of 100 to 160 cents clean normally.   

Next week’s offering has just shy of 50,000 bales on offer to the trade - pretty much a normal volume when looking at the totals since January. Barring any disaster with the FRX ascending, the market should hold around these levels with still no word on when the trigger will be pulled on the Chinese government uniform orders. For those growers who wish to follow the Cumnock Ewe Competition next Tuesday there are a few seats left on the bus that will be going around the farms that have entered sheep. Contact Scott Darmody on 0402 772 342 or scott@macwool.com.au for any information regarding this good day out.

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Main Buyers (This Week)