Weekly Market Reports


29 January 2016

Friday, January 29, 2016

 WEEKLY MARKET REPORT

Week Ending 29th January, 2016

AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S31/15

This Week

M31/15

Last Sale

S30/15

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1550

1542

1569

-19

1350

+200

18

1531

1517

1550

-19

1318

+213

19

1439

1433

1464

-25

1209

+220

20

1384

1376

1409

-25

1155

+229

21

1376

1373

1403

-27

1139

+237

22

1366n

1361

1387n

-21

1122n

+244

26

983n

976

991n

-8

845

+138

28

839

824

842

-3

783

+56

30

760

753

773

-13

745

+15

MC

1150

1147

1149

+1

853

+297

MARKET RUNS OUT OF PUFF!

The slow down in buying urgency last Thursday did filter through to this week as the lifting exchange rate (2%) was enough to put the brakes on the rising market after good gains over the opening 2 sales of the year. Along with the rising A$, several other factors contributed to a falling market. The floods in Geelong at a scouring plant and a broker’s wool-store, access to finance locally and still larger offerings than expected all cited as influences on this sale’s market direction.

The EMI lost all of last week’s gains to close 16 cents lower at 1280. In US terms as the currency strengthened the indicator rose by 7 cents to 902. The sale opened on a softer note and worsened as the week went on as all indicators lost 15 to 25 cents - Chinese types most affected. The better quality and specified European types actually recorded modest gains on both selling days (most emphasis on 18.5 microns and finer) as the gap between these and lower spec types blew out to some might say “normal discounts”.

Skirtings followed the fleece room’s lead as minor downward adjustments on both days saw losses range from 10 to 20 cents for most types and descriptions on offer. Cardings opened the sale on a firm note but were caught up in the falling market on the closing day to have some LKS in buyers’ favour, CRS unchanged and STN back by 15 to 20 cents. Crossbred offerings continue to be massive: 30% of Melbourne’s catalogue, 27% of the whole Eastern Seaboard selection, a big % being XB LMS, shorn to satisfy Coles’ and Woolworth’s preference for shorn LMS in the saleyards. This sector faded as the sale progressed the broader microns (>30) back 10 to 20 cents while the finer types finished in buyers’ favour, a shortfall in the 100mm finer fleece types keeping these near previous levels.

Growers reacted to the downward shift in prices as 13.5% was passed in (a lift of nearly 10% from the previous sale), more of a reflection on higher price expectations than anything. Just under 40,000 bales were cleared to the trade compared to over 57,000 bales last week, reinforcing that smaller offerings always don’t equate to a rising market as other factors (as mentioned earlier) can play a big role in price direction.

Next week has a similar national selection to this sale with the stronger A$ determining initial buyer sentiment but on the flip-side some fresh enquiry converted to sales looks like the necessary ingredient to keep the market on track - time will tell!! Another factor on the radar is Chinese New Year, a week long celebration starting Monday, 8th February, this could have a bearing on Sale 33 as most wool industry participants could be on annual leave.

Global markets seemed to settle this week as the big freeze in the US caused a spike in oil usage for heating sending the price of crude higher by 10%. We sell early on Wednesday, hopefully to a solid market.

 

Main Buyers (This Week)

 

1

Techwool

5431

2

Chinatex

4095

3

Fox & Lillie

3421

4

Tianyu Wool

3068

5

 Modiano

2513

6

Lempriere (Aust)

2195

7

Global Wool Exp.

1954

8

Aust. Merino

1925

9

Kathaytex (Vic)

1804

  

Eastern Market Indicators (AUD cents/kg clean)

1280 cents ê 16 cents compared with 22/01/2016

Northern Market Indicators (AUD cents/kg clean)

1312 cents ê 14 cents compared with 22/01/2016

AUD/USD Currency Exchange

0.7046 é 0.0141  compared with 22/01/2016

22 January 2016

Friday, January 22, 2016

WEEKLY MARKET REPORT

Week Ending 22nd January, 2016

AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S30/15

This Week

M30/15

Last Sale

S29/15

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1569

1555

1554

+15

1297n

+272

18

1550

1532

1531

+19

1273

+277

19

1464

1451

1451

+13

1194

+270

20

1409

1402

1391

+18

1145

+274

21

1403

1399

1384

+19

1136

+267

22

1387n

1385

1369n

+18

1119n

+268

26

991n

990n

978

+13

832n

+159

28

842

838

834

+8

762

+80

30

773

764

778

-5

722

+51

MC

1149

1156

1140

+9

839

+310

BIG VOLUMES, NO DRAMA!

Wool growers offering wool in this sale would’ve been holding their breath early in the week as the largest wool sale in 5 years commenced. This week’s 60,000 bale catalogue followed on from last sale’s 54,000 offering making it the biggest fortnight of wool sales since November, 2010. The A$ spent a few days below 69 cents, enough to convince exporters to step in and buy despite the big offering and a history of not being able to finance such a large catalogue. The market moved higher as the sale progressed with all indicators adding 10 to 20 cents to their values, bar 18.8s up by 30 cents. Most emphasis was on the low VM, high nkt lots as some high VM over-long types with high mid-breaks struggled to maintain levels achieved in the opening sale of the year.

Skirtings were more subdued in their movements as 18 micron and finer were quoted as 5 to 10 cents dearer for lots >4% VM with all other types fully firm for the week. Cardings continued to strengthen as this sector heads back to the record levels we saw in the winter. All types added 10 to 15 cents to their values with the 3 centres MCIs around the 1150 cent mark - astounding money for these types. Crossbreds reversed the losses of last week as medium types (26/28 micron) added 10 to 15 while other microns remained unchanged. The % of crossbred wool fell to 27% of the total offering on the eastern seaboard but eclipsed last sale by 300 bales. Despite popular opinion of peak offerings of crossbreds from October to November, the peak period is December to January. This could be due to an increase in crossbred lambs being shorn as Coles and Woolworths are reluctant to buy woolly lambs.

Despite the global turmoil of stock markets and the collapsing commodity market, the wool market seems to resist the severity of reactions in those areas. At $30US/barrel, (this equates to 12 cents US/litre) oil is fast approaching an unviable level. In $AU this equates to about $40/barrel or 16 cents/litre!! The OPEC countries’ reluctance to scale back oil production in the hope to squeeze other oil producing countries out could well be working but is damaging global economic growth, coupled with the hint of more interest rate rises in the US sending stock markets into a spin (downwards!!). Adding to stock market turmoil China’s growth did slow to 6.8% in the final quarter of 2015, its full year growth the lowest in 25 years. Quantities scale back to mid 40,000 over the next few sales but the $AU jump back to 70 cents may see buying urgency slow (as it did late on Thursday) despite some outstanding contracts to fill.        

Ag Concepts Fwd Prices at 22 January, 2016

Micron

Date

Low

High

Micron

Date

Low

High

28

10-Feb-16

822

822

19

6-Jul-16

1440

1440

19

13-Apr-16

1435

1435

21

22-Feb-17

1300

1300

 

Main Buyers (This Week)

 

1

Techwool

7468

2

Global Wool Exp.

6634

3

Fox & Lillie

5487

4

Chinatex

5149

5

Tianyu Wool

4076

6

Lempriere (Aust)

4000

7

PJ Morris

3317

8

Modiano

2745

9

Kathaytex (Vic)

1511

 

 

Eastern Market Indicators (AUD cents/kg clean)

1296 cents é 14 cents compared with 15/01/2016

Northern Market Indicators (AUD cents/kg clean)

1326 cents é 12 cents compared with 15/01/2016

AUD/USD Currency Exchange

0.6905 ê 0.0035  compared with 15/01/2016

17 January 2016

Friday, January 15, 2016

WEEKLY MARKET REPORT

Week Ending 15th January, 2016

AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S29/15

This Week

M29/15

Last Sale

S25/15

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1554

1531

1530

+24

1281

+273

18

1531

1509

1508

+23

1266

+265

19

1451

1449

1430

+21

1191

+260

20

1391

1388

1359

+32

1155

+236

21

1384

1386

1350

+34

1150

+234

22

1369n

1372

1338n

+31

1125 (M)

+247 (M)

26

978

987n

1000n

-22

837n

+141

28

834

825

844

-10

764

+70

30

778

771

797

-19

721

+57

MC

1140

1136

1117

+23

828

+312

                                                               FLASH IN THE PAN …??

It seems the three week recess couldn’t finish quick enough as buyers were keen to secure wool from the outset in Melbourne on Tuesday. With the build up of wool over the break and large offerings in the first fortnight of the year (115,000 bales) opinion was divided as to how the market would open. The A$ rose to over 73 cents in the last week of December but, as turmoil in global stock markets greeted the new year, currencies fell against the US$ and two suspensions of trading on the Shanghai stock market sent shockwaves around the world as to how long it would take the world economy to finally shake off the lingering effects of the GFC. Our currency fell to below 70 cents, this being the catalyst for the market to open to a dearer trend.

A look at the above table shows good increases of 20 to 35 cents for all microns (some better types up to 50 cents higher) and the lower spec types closing the gap on their more fancied counterparts as buyers were keen to secure quantity early in the sale. Buying urgency had dissipated by Thursday to see a softening for fleece types by 10 to 20 cents as the large offering had stretched buyers’ finances to the limit.

Skirtings escaped Thursday’s fleece hiccup as the opening days advances of 20 to 30 cents for all types and descriptions was maintained till the final lots sold on Thursday. Cardings continued on their merry way as the 3 centre’s MCIs are all well into the 1100 cents range (1123 to 1140) all adding 15 to 25 cents. Stains and locks performed the best recording 25 to 30 cent gains while CRS rose by 10 cents. Despite the favourable shift in currency crossbred took a backward step due to the big quantity (30% of the total eastern seaboard selection), 33% of Melbourne’s total. This was the biggest XB offering in 12 months with most microns falling 10 to 20 cents.

Global stock markets worst start to a year in 80 years along with key commodity prices at poor levels and the uncertainty about China’s ability to maintain economic growth over 5% is weighing heavily on currency movements. The US economy is continuing to grow at a good rate as the rest of the world could be described as “sluggish” at best. Currency shifts do affect the market as this week proves, despite the stock markets’ turmoil and China’s uncertainty. Next week’s offering of 60,000 bales will test the market - the largest sale in 5 years.

 

Ag Concepts Fwd Prices at 17 January, 2016

Micron

Date

Low

High

Micron

Date

Low

High

21

10-Feb-16

1400

1400

21

27-Apr-16

1375

1375

19

23-Mar-16

1450

1450

21

22-Jun-16

1350

1350

 

Main Buyers (This Week)

1

Techwool

8306

2

Fox & Lillie

6814

3

Chinatex

4861

4

Lempriere (Aust)

4105

5

Tianyu Wool

2686

6

Global Wool Exp.

2169

7

Australian Merino

2156

8

PJ Morris

1802

9

Michell Aust.

1483

 

 

Eastern Market Indicators (AUD cents/kg clean)

1282 cents é 17 cents compared with 17/12/2015

Northern Market Indicators (AUD cents/kg clean)

1314 cents é 20 cents compared with 17/12/2015

AUD/USD Currency Exchange

0.6940 ê 0.0234  compared with 17/12/2015