WEEKLY MARKET REPORT

Week Ending 7th August 2020

 AWEX Northern Micron Indices Comparison

A DISASTROUS RESUMPTION!!

While the 3 week winter recess was a welcome break from wool sales and a chance for everyone to catch their breath, it did little to enhance the positive market direction of prices we saw in the 2 opening sales of the season. As is always the case the lag time in receivals saw volumes of wool for the resumption build up to 47,000 bales and the FRX ascended by 2.5 cents to almost 72. This, coupled with a wait and see approach by many buyers, spelled disaster for the resumption of sales as talk of a price reduction of 60/80 cents was well and truly on the cards. If this was only true!! The market opened far worse than this predicted fall as all sectors fell by 40 to 165 cents. The AWEX EMI fell by 101 cents on the opening day of sales. The market steadied in the second session but still suffered losses. By week’s end the EMI retracted by 128 cents (11.5%) to just 1006 with the falls in US$ terms not as bad - a 63 cent drop to 723.  Merino fleece types fell by 145 to 165 cents while skirtings gave up 70 to 120 cents. Merino cardings also suffered heavy losses, washing types (< 3%VM) lost 50/70 cents while carbonising types > 3% VM fell by 80 to 120 cents. Crossbreds were the least affected sector with losses ranging from 40 to 60 cents.

The opening day’s fall of 101 cents was the biggest daily fall of the EMI for exactly 12 months. The fall in % terms in the opening session of 8.9% was the largest daily fall in 17 years. The weekly collapse of 128 cents is the largest since April when it lost 155 cents. The % fall of 11.5% for the week is the largest weekly fall since 1991 when the floor price was abolished and the market nosedived by 39%. The passed-in rate soared to 30% nationally, 51% in Fremantle with their opening session saw them with a pass-in rate of 65%. Another sad statistic is the year-on-year comparison of the EMI, 1006 to 1676 a year ago, a 40% drop in the market.  

No type was immune to the virtual, almost complete lack of interest from some exporters as the “wait and see” approach cruelled the market. Many in the industry questioned the 3 week recess under current circumstances should it have been shortened to 2 weeks and try to reduce the opening sale’s volume to a more manageable quantity that the subdued demand may have been able to cope with. As it turned out 42,700 went to auction with 4400 bales withdrawn and 12,800 passed-in to see only 30,000 bales sold to the trade but this looked to be far too much wool for the trade to handle at this stage. While prices collapsed competition was more widespread as European, Japanese and Indian inquiry lifted, as the major European top-maker, Modiano, bought 30% of the XB selection. Top-makers led the buying lists but enquiry further down the processing pipeline is almost nil, however, low prices can often deliver higher demand and eliminate the stumbling block of oversupply from held grower stocks and passed-in wool. Hopefully the market can steady next week with 33,000 bales on offer. No one wants a repeat of August 2019 when the EMI lost 379 cents - 1754 to 1375.

Southern Aurora Fwd Prices            

Main Buyers (This Week)