Weekly Market Reports


9 January 2015

admin Macwool - Friday, January 09, 2015

WEEKLY MARKET REPORT

Week Ending 9th January, 2015

AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S28/14

This Week

M28/14

Last Sale

S24/14

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1272

1251n

1272

0

1415

-143

18

1243

1243n

1250

-7

1360

-117

19

1205

1200

1210

-5

1305

-100

20

1173

1167

1176

-3

1274

-101

21

1160

1162

1164n

-4

1261

-101

22

1144n

1143

1157n

-13

1249n

-105

26

848n

838n

840

+8

763n

+85

28

770

766

741

+29

673

+97

30

728

714

705

+23

633

+95

MC

829

838

804

+25

826

+3

MINIMUM BALE WEIGHT UP TO 120kg!

Wool sales re-commenced this week following the annual 3 week Christmas recess. Another large selection greeted buyers - 53,000 bales. With next week’s sale an anticipated national offering of 56,000 bales that will see 5 consecutive sales of 50,000+. The market looked to handle the big offering okay as subtle movements for the indicators in Sydney were the order of the day. All movements were restricted to only 5 cents either way bar 22s which lost 13 cents. It was a different story down south and in the west as both centres gave up their pre-Christmas gains, Melbourne down by 4 cents, and Fremantle falling 15 cents, their regional indicators now at 1043 and 1094 respectively, the Sydney indicator at 1084 cents.

Most exporters looked to take a cautious approach to the opening sale as far as the fleece sector was concerned; only a few lots with the right specs looked up to 10 cents better than their indicators with 2 lots from Coolah 20 to 34 cents higher. Sydney’s Indicator rose 6 cents due to good increases in Room 2 but with Melbourne’s fall this left the EMI unchanged at 1059.

Room 2 types again out-performed their fleece counterparts as has been the case for some time. After a shaky start skirtings made small gains of 5 to 10 cents with most emphasis on >5% VM around the 19 micron range. Cardings came under strong pressure as 2 local processors, Michell’s and VWP bought 30% of this sector as stains added 10 cents while locks and crutchings jumped 20 to 35 cents sending this sector towards 18 month highs. The fall in the exchange rate certainly helped the crossbred selection move forward despite the massive offering - 23% nationally (12,500 bales) and 32% (9,200) of the Melbourne catalogue. The fine and broad indicators (26 and 32s) gained around 10 cents while the 28 to 30 micron types added 25 to 30 cents placing 30 microns at near record highs since AWEX began market reporting and even going back to market reports first initiated by the AWC in 1979.

Away from wool sales was the announcement that the minimum bale weight will be increased from 110kg to 120kg, effective 1st January, 2016. Debate has raged for over 6 months on this issue, exporters wanted a 130kg minimum, but 120 was the eventual weight to be implemented. The only exception will be speciality fleece bales finer than 18.5 micron, their minimum unchanged at 90kg. For the majority of our clients, this will make little change to their wool pressing systems.

The downward shift in the exchange rate has done little to boost wool prices, especially in the merino fleece sector. Rather than make prices dearer it has helped to stop a fall in prices. In July, 2014, the A$ was buying 94 US cents, the EMI was 1017 and 962 in US terms. Today with the A$ buying 80 US cents the EMI is up to 1059, but in US terms, 100 cents lower than July’s level, now 857, a big turn-around due to the exchange rate movements. Demand is still the key to prices rising or falling. Europe is still experiencing stagnant economic growth with this situation not about to change any time soon, as the real threat of more terrorist attacks will play in consumer’s minds as they curb their spending habits by staying away from public areas such as shopping centres and even sporting events. China’s economy is on a slowing path also as growth slows to 5% .The US, however, is bucking the trend with good economic growth but we cannot rely on one customer to solely lift demand.

The one thing that might help to promote spending is the low prices of commodities. Cheap oil (now at US$49/barrel from a June high of $117/barrel) can fuel the global economy especially in oil importing countries. The US is almost self-sufficient for energy, now only importing 12% of the oil it needs and is the world’s largest producer of bio-diesel and ethanol. A global expansion in oil production has led to an over-supply as the OPEC countries refuse to cut their production, thus lower fuel prices. The fall in Iron ore prices to $70/tonne from $130 a year ago and coal back to $63/tonne could also assist economic growth in countries that rely on these 2 commodities to drive their industries.                 

Main Buyers (This Week) 

1

Techwool

6725

2

Chinatex

5871

3

Fox & Lillie

5510

4

Kathaytex (Vic)

3899

5

Modiano

2470

6

Lempriere

2440

7

Tianyu

2288

8

Aust. Merino Exp

1862

9

PJ Morris

1195

 

Eastern Market Indicators (AUD cents/kg clean)

1059 cents ó 0 cents compared with 12/12/2014

AUD/USD Currency Exchange

0.8097 ê 0.0242  compared with 12/12/2014

Northern Market Indicators (AUD cents/kg clean)

1084 cents é 6  cents compared with 12/12/2014

 

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