Weekly Market Reports


8 May 2020

admin Macwool - Friday, May 08, 2020

 WEEKLY MARKET REPORT 

Week Ending 8th May, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S45/19

This Week

M45/19

Last Sale

S44/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1657

1631

1697

-40

2480

-823

18

1488

1469

1518

-30

2413

-925

19

1353

1353

1414

-61

2288

-935

20

1303

1299

1362n

-59

2273n

-970

21 1278n 1286 1362 -84 2259n -981
26 790n 846n 835n -45 1523 (M) -677 (M)

28

611n

596

661n

-50

1323 (M)

-727 (M)

30

-

476

478 (M)

-2 (M)

1005n (M)

-529 (M)

MC

796n

812n

840n

-44

1093

-297

IS THE LOW POINT IN SIGHT?

Another poor week for the wool market as the pattern was similar to previous sales with demand almost non-existent as the market recorded more heavy losses across the board. It wasn’t that long ago that buyers were talking of weekly volumes of 35,000 bales being sustainable in the current environment. The absolute lack of demand has meant that, over the past 5 sales, the national catalogue has only averaged 24,000 bales but this has been unsustainable as the market has lost 117 cents, most of that (102 cents) over the last 2 sales. With passed-in lots and growers withdrawing wool the amount of wool cleared to the trade has only been about 20,000 bales/week. The AWEX EMI slumped by another 55 cents to 1170 this week - its lowest point since 2015. The fall in US$ terms was similar - a 48 cent decline to 753, a 10 year low, this despite the FRX falling by a cent to 64.35. Merino fleece types gave up 20 to 65 cents while skirtings fell by 30 to 50 cents across the entire range. Cardings fell by another 20 to 70 cents as the MCI descended by an additional 44 cents to 796 and crossbreds gave up 40 to 50 cents. Surprisingly the passed-in rate fell to 18% down from 25% last sale as more growers seem prepared to meet the market rather than risk a lower price later on.

How low can the market go?? No-one truly knows the answer and opinions are divided. Are we at the bottom? If not, at what level is the low point? And how long will the recovery take for the market to get back to an acceptable level where all participants along the pipeline can make money. Two major buyers we spoke to had varied opinions, from the market perhaps bottoming out sooner rather than later to the market progressively getting cheaper well into our winter months. One buyer thought the only way to help global economies kick start were stimulus packages but this would place all countries in more financial stress - a risk some will not take. The level of consumer confidence in  all major wool consuming countries (US, Europe, Japan and South Korea) has literally fallen off a cliff in April due to the social lockdowns and restrictions that have lead to a collapse in discretionary consumer spending. Only China’s figures showed a very small decline in February before a slight improvement in March, unbelievable!! The world is in a recession and, as to when industry and economies can be running to full capacity and unemployment rates fall as lockdown restrictions ease, then will we see consumers willing to spend their hard earned money again and economic growth rebound to levels we saw pre Covid-19. The wool market absolutely depends on consumer’s ability to spend their excess cash on our product.

         Southern Aurora Fwd Prices            

Micron

Date

Low

21

July 20

1250

Main Buyers (This Week)

1

Techwool

2784

2

Tianyu Wool

2020

3

United Wool

1816

4

Endeavour Wool

1626

5

PJ Morris

1576

6

Fox & Lillie

1519

Eastern Market Indicators (AUD cents/kg clean)

1170 cents ê 55 cents compared with 01/05/2020

Northern Market Indicators (AUD cents/kg clean)

1214 cents ê 45 cents compared with 01/05/2020

AUD/USD Currency Exchange

0.6432 ê 0.0102 compared with 01/05/2020

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