WEEKLY MARKET REPORT

Week Ending 6th November, 2020

 AWEX Northern Micron Indices Comparison

WILD VOLATILITY SET TO CONTINUE!!!

The market correction we spoke of in our last report was indeed swift but, on the flipside, the downward trajectory that usually follows the large upward jolt was just as quick. The volatility in the market has everyone bamboozled as now the day-to-day wild movements in the market are impossible to predict and harder to keep up with. The market roared away in the opening session only to give back half of the first day’s gains on the 2^nd day. We have been fortunate enough to sell on the “dearer” days when the market has lifted significantly over the past few sales. All microns added triple figures to their values on Wednesday (100 to 135) only to give up 40 to 60 cents in the closing session. This saw the AWEX EMI ascend by 50 cents to 1188 for the sale with a 40 cent rise in US$ terms to 853. The slight fall in the FRX early in the week may have assisted the market but then the rise later in the week certainly helped the buyers pull the market back. THE A$ sits well above 72 cents on Friday morning - not a good sign for next week with the national catalogue at 42,000 bales.

All fleece microns finished the sale 50 to 80 cents higher but, looking at the quotes, some identical types had up to 100 cents difference in price from day to day. There was a similar pattern in the skirting sector but, for 17.5 and finer, these types managed to hang on to their 110 to 130 cents gains on the first day with broader lots rising and falling over the course of the sale to finish the week 30 to 40 cents to the good. Cardings also told a similar story to their merino combing counterparts - up on the opening day only to fall more than the initial gains in the final session as the 3 MCIs lost an average of 19 cents as all types in this sector were 10 to 20 cents cheaper. Crossbreds followed a similar pattern to the merinos with good rises on the opening day only to adjust downwards in the final session to finish the sale 20 to 30 cents higher. The passed-in rate fell from last week’s high of 26% to 9% this week (2.6% on Wednesday and 15% on Thursday when the market fell).

The current volatility we are experiencing has been nothing like we have seen before, certainly not to this extent. Over the past 10 selling days, stretching back to early October, the market has moved in total by 466 cents (an average of 46 cents/day). The current purchasing pattern of stepping in and buying like there’s no tomorrow then taking a “sit on the fence and wait approach” to let the market lose all the ground it gained the day or week before is frustrating to all in the industry here and complexing as to how the Chinese can make money when the market is fluctuating so widely within the space of days and weeks. Planning to offer wool on hold is now becoming a lottery as picking a market that might remain solid after a good rise is nigh on impossible as current volatility now rules out any ideas of where the market might be in a week or two.

Also on the horizon is the re-emergence of the pandemic in Europe. Britain went back into lockdown last night with only essential services operating. The inability of consumers to go out and spend money could cruel some EU economies that were getting back on their feet. This could put the wool market’s recovery in a tailspin if Europeans can’t spend in what is one of our most important markets as the big Christmas spending period is approaching fast and a northern hemisphere winter is very close, a peak period for consumers to buy woolen products. As we said earlier 42,000 bales are on offer next week and the cheaper pattern on the final day of this week’s sale looks set to continue next sale.

        Southern Aurora Fwd Prices            

Main Buyers (This Week)