Weekly Market Reports


24 June 2016

Friday, June 24, 2016

WEEKLY MARKET REPORT

Week Ending 24th June, 2016

AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S52/15

This Week

M52/15

Last Sale

S51/15

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1532

1525

1534

-2

1530

+2

18

1505

1501

1512

-7

1462

+43

19

1471

1467

1476

-5

1393

+78

20

1435

1443

1420

+15

1352

+83

21

1423

1424

1398

+25

1338

+85

22

1402n

1412n

1379n

+23

1301n

+101

26

-

1091n

-

-9 (M)

1110n (M)

-19

28

784n

778n

786

-2

924

-140

30

686n

690n

703n

-17

826

-140

MC

1079

1075n

1084

-5

1096

-17

BRITAIN VOTES AND IT'S ARRIVEDERCI EUROPE!

 Another solid sale this week as buyers were greeted with the smallest national catalogue for 4 years (22,100 bales) as only the 2 East Coast centres were operating. The EMI added a modest 6 cents to 1285. The move in US$ terms was bigger - the largest shift in any direction for 12 weeks posting a 21 cent rise to 966 helped by the rise in the exchange rate to over 75 cents. Even with the market’s gain the market looked to have split into two. Finer indicators <19 micron were up to 5 cents cheaper bar the cracking FNF superior types that are few and far between commanding premiums of 40 to 150 cents higher than their indicators as lots from 2 Yass clients in our catalogue demonstrated - all off to Italy for processing. The broader indicators helped the market push into positive territory as 19.5s were in sellers’ favour with 20 to 23s 10 to 25 cents higher. Some of the low VM types (1 to 2%) even finished better than their indicators with the ever increasing volume of burrier types 20 to 30 cents back from last sale, but we still saw over a 95% clearance rate for fleece.

The smallest selection of skirtings in 12 months resulted in a lift of 5 to 10 cents for all types and descriptions with some carbonising (>15% and low VM<5%) lots adding up to 20+ cents. Cardings continued their cheaper trend despite the smallest weekly offering of this category (2,216 bales) since AWEX began market reporting over 20 years ago losing 5 cents to 1079 as all types gave up the 5 cent loss on the opening day. Crossbreds also suffered for the upward shift in the exchange rate as a 10 to 20 cent drop covered most types and descriptions.

The one and only factor dominating news this week is the British vote on exiting the EU. At latest reports the “exit” vote was at 52% to 48% to stay in the EU but still plenty of votes to count. This could have massive ramifications for Europe’s economy (and global) if the vote stays on course to exit as some reports from smaller cities keen to get out but Scotland and Nth Ireland are keen to stay in the EU. Due to the uncertainty being created several banks in London have turned off their electronic FX trading facilities. The exchange rate has been jumping around wildly today. The A$ hit 76.50 overnight to 75.25 at 9.00am but has collapsed this afternoon to 73.50. Global equities have galloped ahead as have the price of oil and iron ore.

The market has held up remarkably well considering the movements in the exchange rates and general consensus that the market would struggle prior to sales starting over the past 2 weeks. Countering this negativity is the critically low global supply and a few uncovered positions still outstanding and the 3 week winter recess looming in mid July.

The final sale of the season will be held next week, Sale 53!!! How can this be? Sale 1 started on a Wednesday, 1st July, 12 months ago and Sale 53 will finish on Thursday, 30th June, this situation helped by the leap year!! Only the wool trade could fit 53 weeks into a year. With the A$ well under 74 cents and just 32,000 bales next week the market could finish on a high.

Ag Concepts Fwd Prices at 17 June 2016

Micron

Date

Low

High

21

24-Aug-16

1380

1380

 

Main Buyers (This Week)

1

Techwool

2677

2

Fox & Lillie

2466

3

Aust. Merino Exp

2184

4

Lempriere (Aust)

1732

5

Chinatex

1500

6

Modiano

1352

7

Tianyu Wool

1049

8

PJ Morris

1021

9

United Wool

836

  

Eastern Market Indicators (AUD cents/kg clean)

1285 cents é 6 cent compared with 17/06/2016

Northern Market Indicators (AUD cents/kg clean)

1303 cents é 3 cents compared with 17/06/2016

AUD/USD Currency Exchange

0.7521 é 0.0128  compared with 17/06/2016

17 June 2016

Friday, June 17, 2016

WEEKLY MARKET REPORT

Week Ending 17th June, 2016

AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S51/15

This Week

M51/15

Last Sale

S50/15

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1534

1522

1532

+2

1590n

-56

18

1512

1495

1507

+5

1538

-26

19

1476

1464

1465

+11

1460

+16

20

1420

1426

1405

+15

1410

+10

21

1398

1403

1377

+21

1396

+2

22

1379n

1388

1365n

+14

1366n

+13

26

-

1100n

1070n (M)

+30 (M)

1175n (M)

-75

28

786

779

793n

-7

969

-183

30

703n

699

705n

-2

857

-154

MC

1084

1082

1087

-3

1104

-20

THE WORLD WAITS ON BRITAIN’S VOTE

 After last sale’s reality check with the high exchange rate some traders thought (and hoped!!) there was still some downward movement for the market especially if the A$ remained above 74 cents. Thankfully this was not the case as the market staged a modest recovery of 9 cents for the EMI to 1279, regaining 30% of last week’s losses as the $ spent all week in the mid to high 73 cent range. In US$ terms the shift was minute, down 3 cents to 946. Recent history shows the better style, low VM types that are diminishing in volume are keenly sought after and this sale was no difference again but their less fancied lower style, high VM lots closed the price gap on the superior types. 19 to 23 micron indicators rose by 10 to 20 cents while 18.5 and finer averaged a 5 cent rise with some cracking finer types up to 50 cents higher. Growers warmed to the consolidation of prices on the east coast as over 95% of the fleece selection was cleared to the trade.

Skirtings followed a similar pattern as most descriptions looked 10 to 15 cents dearer. Again, as was the case with the fleece room, low VM types were in high demand, some adding 30 to 80 cents as the odd burry lots were irregular. Cardings couldn’t regain any of last sale’s losses as the MCI fell by 3 cents to 1084. Falls were small as locks and stains closed 5 to 10 cents down while crutchings were firm. This sector of the market is still very good. We had 1 client’s STN make more on a clean basis than their BKN with similar VM (15 to 16%) and another lot of STN (8% VM) - just 30 cents (clean) behind that grower’s WNR PCS with 11% VM. Crossbreds had a mixed sale with 26s up by 30 cents in Melbourne to 1100 cents. Medium indicators were in sellers’ favour back by up to 5 cents with the broader microns >32 slipping by 10 cents.

A much more sedate week as exchange rates held reasonably stable letting exporters trade with a bit more confidence. Quantities are still small with this week’s volume of 31,600 bales the smallest 3 centre offering since August last year. From the end of May to the final sale in June national weekly volumes will only average high 20,000s - certainly a concern for buyers trying to shore up a bit of quantity before the 3 week winter recess starting in mid July. Another concern on the radar is Britain’s vote next Thursday on their continued membership in the EU. The outcome will certainly move exchange rates and have a massive bearing on global economic sentiment.

Futures are keeping pace with the physical market and at one point this week were marginally ahead before the sale commenced. Lock-in prices out to mid September are on par with the indicators to about 30/50 cent discount - still very good prices to hedge for the short term. This strategy should be considered as a solid form of insurance against a price correction. Next sale sees the 2 East Coast centres in action with 24,000 bales on offer - the smallest sale in 12 months. Futures are forecasting a solid sale.

Ag Concepts Fwd Prices at 17 June 2016

Micron

Date

Low

High

21

13-Jul-16

1400

1400

21

24-Aug-16

1375

1375

 

Main Buyers (This Week)

1

Techwool

4739

2

Fox & Lillie

2938

3

PJ Morris

2924

4

Aust. Merino Exp

2923

5

Lempriere (Aust)

2127

6

Modiano

2113

7

Chinatex

1182

8

Tianyu Wool

1115

9

Michell Aust.

1021

  

Eastern Market Indicators (AUD cents/kg clean)

1279 cents é 9 cent compared with 10/06/2016

Northern Market Indicators (AUD cents/kg clean)

1300 cents é 8 cents compared with 10/06/2016

AUD/USD Currency Exchange

0.7393 ê 0.0074  compared with 10/06/2016

10 June 2016

Friday, June 10, 2016

WEEKLY MARKET REPORT

Week Ending 10th June, 2016

AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S50/15

This Week

M50/15

Last Sale

S49/15

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1532

1512

1574

-42

1618

-86

18

1507

1487

1553

-46

1578

-71

19

1465

1451

1506

-41

1521

-56

20

1405

1403

1436

-31

1478

-73

21

1377

1374

1404

-27

1469

-92

22

1365n

1370

1386n

-21

1426n

-61

26

1070n (M)

1070n

1096n (M)

-26 (M)

1165n

-95

28

793n

781

821n

-28

971

-178

30

705n

699

715n

-10

865

-160

MC

1087

1093

1111

-24

1112

-25

AUSSIE DOLLAR JUMPS AND SPOILS THE PARTY!

 The only good thing about the past week has been the rainfall over a big area. As far as the wool market is concerned what everyone had feared, happened. The EMI fell 26 cents to 1270, the first downward shift in 11 selling days but saw a 9 cent gain to 948 in US$ terms - this due to the wild movements of exchange rates. The A$ took a run up to 75 cents at one stage giving the buyers what they wanted - a reason to pull back prices. Despite the smallest offering in 12 months (27,200 bales) this was not going to be enough to prevent the market from falling. The opening day saw heavy losses across the board with some indicators actually firming up on the final day. Losses were felt more in the finer microns <19.5 giving up 35 to 45 cents as tender and less stylish types were most affected with the “Spinners” style and better holding previous sales levels. 20 micron and broader weren’t as adversely affected falling by 20 to 30 cents. The volume of VM is still dictating price as just 44% of the fleece catalogue (16,500 bales) on offer was below 1%, the lowest for the entire season.

Room 2 saw all descriptions fall as well. Skirtings saw falls of 10 to 15 cents for types <3% VM while burrier lots in the 5 to 8% VM range looked 30 to 40 cents cheaper. Crossbreds also fell out of favour as losses of 10 to 30 cents across the board looked to be the quote by the end of the sale. Cardings couldn’t maintain their good recovery of the past 5 sales with both MCIs on the east coast now below 1100 cents. All types in this sector gave up 20 to 30 cents from last week.

Currency again played a pivotal role in the demise of the wool market this week. Poor job growth figures in the US for May (38,000), the smallest in 6 years, saw the US$ fall against all major currencies as this figure was well below predicted forecasts as the expected rate rise in the US now looks unlikely at the end of June, but locked in for July. The A$ went to 73.65 cents on this news. The rot set in even further on Tuesday as the RBA announced, as expected, no change to rates here to push the A$ above 74 cents just in time for this week’s wool sales. The A$ did peak at 75 cents briefly on Wednesday night but has softened to low 74 cents this afternoon - this from a low point of 71.55  late in May, just  a week ago!!

This week was a clear demonstration of how sensitive exchange rates can be to economic news, be it good or bad. The sudden  volatile shift of the A$ caught everyone by surprise as the pass-in rate climbed to 13% as just 23,600 bales were cleared to the trade. Price levels for most types are still good, bar finer than 19s where over-supply and high VM that affects style is still a problem. The 19 to 23 micron indicators are running at 86 to 94% over the past 5 years (the market has only been higher than these levels 14 to 6% of that time period) as is the MCI sitting at 89%. Fundamentals have not changed in the past week. Despite the market’s hiccup, supply is low and demand is still good. Fremantle comes back on board next week as the national catalogue will be around 34,000 bales. We sell first up on Wednesday with 1200 bales on offer. Hopefully currencies will be stable allowing traders to book up wool without the fear of getting burnt by these erratic shifts in currency.

Ag Concepts Fwd Prices at 10 June 2016

Micron

Date

Low

High

19

26-Oct-16

1410

1410

 

Main Buyers (This Week)

1

Techwool

3332

2

Aust. Merino Exp

2472

3

Chinatex

2320

4

Lempriere (Aust)

2217

5

Fox & Lillie

1928

6

Tianyu Wool

1336

7

 PJ Morris

1069

8

Kathaytex Aust

957

9

New England Wool

538

  

Eastern Market Indicators (AUD cents/kg clean)

1270 cents ê 26 cent compared with 3/06/2016

Northern Market Indicators (AUD cents/kg clean)

1292 cents ê 31 cents compared with 3/06/2016

AUD/USD Currency Exchange

0.7267 é 0.0219  compared with 3/06/2016

3 June 2016

Friday, June 03, 2016

WEEKLY MARKET REPORT

Week Ending 3rd June, 2016

AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S49/15

This Week

M49/15

Last Sale

S48/15

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1574

1550

1583

-9

1624

-50

18

1553

1531

1557

-4

1607

-54

19

1506

1492

1509

-3

1553

-47

20

1436

1436

1441

-5

1516

-80

21

1404

1406

1404

0

1499

-95

22

1386n

1385

1386n

0

1458n

-72

26

1094n

1096

1098n

-4

1155n

-61

28

821n

809

826

-5

955

-134

30

715n

724n

715n

0

863

-138

MC

1111

1111

1096

+15

1096

+15

WINTER'S HERE AND SO IS THE RAIN!

 This week’s sale followed the pattern of the past 4 sales - very little movement. The benchmark EMI could only manage a 1 cent fall to 1296 cents, the first negative move in 11 selling days. As the exchange rate spent most of the week above 72 cents this pushed the indicator up by 4 cents in US terms to 939 continuing its narrow band of trading over the past 6 weeks. The market split in two as far as fleece types were concerned - finer than 20 micron 5 to 10 cents back while 16.5s lost 15 cents - the inferior quality of the offering dragging prices into buyers’ favour. On the flipside, the superior types that are diminishing in volume (finer than 19 micron) are still commanding premiums of 100+ cents over their indicators as a clip from Yass in our catalogue demonstrated. Broader types found good support to finish the sale up by 5 cents, growers still happy with these levels clearing over 96% of the fleece on offer.

Skirtings followed the pattern of the fleece room, broader types regardless of VM were solid while finer lots <18.5 and under 5% VM lost 15 to 20 cents. Again quality being a factor in price direction with the better style types tending dearer by 20 cents. Crossbreds also seemed to split into 2 markets, finer microns <26 up to 20 cents dearer while broader types lost up to 5 cents.  Cardings again forged ahead as all 3 selling centres MCIs are now over 1100 cents (1111 to 1108) - great money for this sector as all types lifted by 15 to 20 cents.

After what was expected to be a solid to dearer market, the release of better than anticipated GDP figures prior to the sale commencing on Wednesday was enough to see the A$ rise by a full cent to 72.85 taking away any chance of a rising market. This quarter’s growth was the biggest since the September 2012 figures. As the exchange rate softened overnight on Wednesday buyers were able to buy at a touch higher rate on Thursday to see the market edge higher. Supply, or lack of, will keep pressure on buyers as South Africa is now into an 8 week sale recess and shearing in New Zealand grinds to a virtual halt for winter. Fremantle has next week off as the national catalogue falls below 30,000 bales on the Eastern seaboard.

Latest testing figures reinforce just how tight supply is. Testing for May was back by 13.5% when compared to May 2015. The progressive year to date comparison shows 6% less bales tested and weight of wool tested when compared to last season, with bales offered running 8% less than last season.

We sell next Thursday with a catalogue of 1550 bales to what should be a solid market providing the A$ doesn’t move upwards. Let’s hope the rain keeps falling all weekend over most areas. 

Ag Concepts Fwd Prices at 3 June 2016

Micron

Date

Low

High

21

13-Jul-16

1380

1380

 

Main Buyers (This Week)

1

Techwool

4508

2

Lempriere (Aust)

3425

3

PJ Morris

2460

4

Tianyu Wool

2134

5

Chinatex

1966

6

Fox & Lillie

1892

7

Aust. Merino Exp.

1760

8

Michell Aust.

573

9

United Wool Co.

499

 

Eastern Market Indicators (AUD cents/kg clean)

1296 cents ê 1 cent compared with 27/05/2016

Northern Market Indicators (AUD cents/kg clean)

1323 cents ê 4 cents compared with 27/05/2016

AUD/USD Currency Exchange

0.7248 é 0.0038  compared with 27/05/2016