WEEKLY MARKET REPORT

Week Ending 6^th July, 2018

AWEX Northern Micron Indices Comparison

SEASON STARTS WITH A DOWNWARD THUD!!

The opening sale of the new season was nothing to crow about as the softer trend to finish the last sale of the ’17 season accelerated to have the AWEX EMI give up 62 cents (3%) to fall below the 2000 cent mark for 5 weeks to 1994. The fall wasn’t as big in US$ terms - 42 cents to 1471 as the A$ remained fairly steady at just below 74 cents. The fall was the largest weekly decline in six years as prices across the entire spectrum fell on both days. By week’s end most microns (17 to 22s) retreated by 45 to 85 cents. Only the very best lots were least affected, down only marginally with the odd lot actually dearer that had the right specs that suited Italian mills. The types that suffered heavier losses contained VM levels above 2%, low nk/t readings and high mid-breaks. Some lots were punished severely, almost neglected, as buyers picked the eyes out of the catalogue with some discounts way above what the losses read on the AWEX report resulting in a 30% pass-in rate in our fleece catalogue - our highest for some years.

Skirtings also took their biggest hit for some time as consistent losses over the 2 selling days had most types pulled back by 50 to 80 cents with > 5%VM affected more than their low VM counterparts with the very odd, better style/low VM type escaping the large losses. Crossbreds had a similar sale to the merino sector, losses ranging from 40 to 65 cents for the 28/30 micron wools with falls for other microns restricted to 20 cents. Cardings were the least affected of any sector as all types and descriptions gave up 10 to 20 cents for the sale.

A tough sale to commence the new selling season as the biggest catalogue since early April had some exporters offside regarding the big increase in quantity. This rise in quantity is a common occurrence as the new financial year ticks over as some growers look to spread their income over the 2 financial years. The increased volume should have been of no surprise to buyers. The rapid rise in the market since Easter (280 cents) may have caught up with the buyers as well. Everyone expected a correction but as to when and how much was the question no-one could answer till now. Another factor was the significant movements of the FRX of the Chinese Renminbi, CNY against the US$ over the past 3 weeks, 7% in favour of the US$ meaning Chinese mills had to find 7% more money to fund their purchases - a bridge too far this week!! Despite the sharp downwards adjustment the market is 470 cents (30%) higher than 12 months ago. Next week is the final sale before the 3 week annual winter recess with 41,000 bales on offer, hopefully the market can hang on??

Main Buyers (this week)