WEEKLY MARKET REPORT Week Ending 9th August, 2019 AWEX Northern Micron Indices Comparison
WOOL MARKET GETS TRUMPED!! Wool sales resumed this week with the market copping a hiding. Talk late last week and early this week was positive for some sectors of the market but sentiment did a 360 degree turn as external influences took their toll. Large falls on both days saw the AWEX EMI collapse by 78 cents to 1676 as finer microns (< 18.5) lost 60 to 90 cents and 19s and broader shed 120 cents. Skirtings fell by 70 to 100 cents while XBs gave up 30 to 60 cents. The only positive sector of the market was Cardings, most types adding 20 to 60 cents to their pre-recess levels. Why the sudden change?? The tit-for-tat trade war between US and China escalated to new levels this week with Trump announcing a 10% tariff on US$300 billion worth of Chinese goods bound for the US. In retaliation China devalued its currency (RMB/Yuan) after it fell to an 11 year low (at the start of the GFC) caused by the tariff measures imposed by America. A weaker yuan makes Chinese exports more competitive thus offsetting the impact of raised tariffs in theory making Chinese products cheaper for consumers. On the flip-side the weaker yuan makes imports going into China more expensive: coal, gas, iron ore and wool so the price paid is adjusted down to compensate. The Chinese move to make their exports more competitive strikes at the heart of Trump’s trade war with them with many economists predicting the yuan could be devalued by another 5% by the end of the year - more bad news for Aussie exports to China. With the positive start to the season in early July and a 2.8% swing in the FRX since then, hopes the market could continue in the same vein were short lived. Despite the ongoing short fall in supply, confidence from mills in China has all but eroded, as sales are running at about half of the normal quantity and most plants running at about 60-70% of their capacity which, given the lack of volume, they are still processing 10 to 20% more wool than they can sell down the pipeline, thus the potential for more price falls. As global economic growth slows consumer demand wanes as the prolonged trade war has some economists talking recession if a resolution isn’t forthcoming soon. Next week has a similar volume of wool available but no sign that the market can rebound. Don’t forget to register for the Sheep Welfare & Husbandry Best Practice Seminar at the Garden Hotel on 27th August.
Ag Concepts Fwd Prices as at 5 July, 2019
Free knitted woollen jumpers for poddy lambs. Call into our office in Dubbo or Macdonald Rural at Brewarrina and take as many as you need. Many colours and styles to choose from! |
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Main Buyers (This Week)
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