Weekly Market Reports


29 November 2019

Friday, November 29, 2019

WEEKLY MARKET REPORT 

Week Ending 29th November, 2019

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S22/19

This Week

M22/19

Last Sale

S21/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1980

1968

2008

-28

2487

-507

18

1863

1849

1885

-22

2372

-519

19

1744

1743

1781

-37

2188

-444

20

1713

1700

1738

-25

2141

-428

21 1716n 1700 1729n -13 2129 -413
26 1168n 1161 1200n -32 1335n -167

28

855n

845

899n

-44

946 (M)

-101 (M)

30

-

694

704 (M)

-10 (M)

753 (M)

-59 (M)

MC

1054

1079n

1052n

+2

1199

-146

MARKET STALLS!!

The recent pattern of price movement was broken this sale as the “up and down” direction over the past 6 to 8 weeks shifted to a falling trend now into its 5th selling day (a 50 cent reduction). Last week’s Thursday firming market in Fremantle gave a false hope that the market would tract upwards but that wasn’t to be. Steady falls over both days saw the AWEX EMI fall by 25 cents to 1530, a similar margin (22 cents) in US$ terms to 1035 despite the FRX falling by 0.30 of a dollar to 67.65 cents - a worrying sign when the market falls and the FRX goes in our favour.

All fleece types fell as all microns gave up 15 to 35 cents with the poorer style types (MF6/7) neglected even more by 50 to 80 cents. Only the very best style (MF3 and better) and NM lots were immune from the discounts. After a few sales of maintaining levels skirtings suffered losses of 30 to 50 cents except < 2.5%VM which halved those falls. All types in the Carding sector were fully firm to sellers’ favour and XBs recorded losses on both days to finish 30 to 45 cents off the pace.

Signs of weaker demand are coming to bear at the present time which is critical for the Autumn/Winter retail season in the Northern Hemisphere. Current price trends and the level of consumer confidence are reflecting the uncertain economic conditions in many countries. Many EU economies have weakened over the past 12 months as consumer confidence wanes there as well in Japan which is at its lowest level for 7 years and worst since 2017 in South Korea. On the flip-side US consumers remain upbeat with low unemployment, a strong economy and wages increasing and stronger consumer confidence in China - a welcome turnaround from low economic growth and the trade war impact with the USA.

More news from the AWI AGM: The main item was the ousting of one-time Chairman and long term director Wally Merriman. The board also announced a further reduction in expenditure and draw down of a further $7.5 million from its reserves due to the less than anticipated levy revenue as a result of less wool being sold, lower prices and the levy % down to 1.5% from 2% which started July this year. The board has also commissioned a review of WoolQ (the platform that has cost several $million). Over 41,000 bales are on offer next week giving the buyers too much of a chance to take a “pick and choose” approach to the market.

Southern Aurora Fwd Prices              

Micron

Date

Low

21

December 19

1700

Main Buyers (This Week)

1

Techwool

3975

2

Aust. Merino

3353

3

Fox & Lillie

3013

4

Endeavour Wool

2238

5

Tianyu Wool

2186

6

United Wool

1816


Eastern Market Indicators (AUD cents/kg clean)

1530 cents ê 25 cents compared with 22/11/2019


Northern Market Indicators (AUD cents/kg clean)

1561 cents ê 30 cents compared with 22/11/2019

   

AUD/USD Currency Exchange

0.6765 ê 0.0030  compared with 22/11/2019

22 November 2019

Friday, November 22, 2019

WEEKLY MARKET REPORT 

Week Ending 22nd November, 2019

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S21/19

This Week

M21/19

Last Sale

S20/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2008

1963

2027

-19

2472

-464

18

1885

1883

1920

-35

2343

-458

19

1781

1788

1818

-37

2204

-423

20

1738

1734

1773

-35

2172

-434

21 1729n 1723 1763n -34 2158 -429
26 1200n 1196n 1204n -4 1245n -45

28

899n

884

910n

-11

845n

+54

30

-

704

724 (M)

-20 (M)

734 (M)

-30 (M)

MC

1052n

1079n

1053n

-1

1180

-128

SAME OLD, SAME OLD ……

The recent pattern of “up and down” for the wool market continued on this series as the AWEX EMI slipped by 19 cents to 1555 - the exact amount of the previous week’s gains. In $US terms the downward shift was a similar figure, a 13 cent loss to 1057 as the FRX moved above 68 cents on Wednesday only to fall back below that level today. Last Thursday’s falling market was the precursor to this sale as falls across the 3 centres on Wednesday were followed by a more positive tone in the final session. All fleece microns suffered, falling by 20 to 40 cents with only the very odd best type or NM lot attracting any sort of premium up to 60 cents. Skirtings again looked to be far less affected by the ebb and flow of demand of their fleece counterparts and sold to sellers’ favour. Cardings also had an uneventful sale with some types in buyers’ favour to have the MCI shed just 1 cent. Crossbreds followed last sales pattern shaving up to 10 cents from their values.

The current price movement of the market continues on. The practice of exporters writing some new business and  buying wool and pushing up prices by 50 to 80 cents then being in the situation of the market going “too high too fast” has them immediately on the back foot and prices retract just as quickly as they were pushed up. The price fluctuation over the past month or so has been around 40 cents (1550 to 1590) as the EMI has been unable to break through the 1600 cent mark. When it does and if that level can be maintained is anyone’s guess.

The Australian Wool Production Forecasting Committee met this week and downgraded its shorn wool production for this season to 272mkg a 9.2% decline from 2018/19, the lowest since 1923/24. The 2 main reasons for this decline are higher slaughter rates (resulting in record prices for lamb and mutton) due to increased demand for red meat caused by the global outbreak of African Swine Flu which has resulted in 25% of the world’s pig population eradicated; and the persistent drought lowering numbers to 67 million, a 7.5% fall from 2018/19.

AWI held their AGM this morning and voting was conducted for the 3 vacant spots on the board. Of the eight candidates up for election, 2 new directors were voted in (Michelle Humphries and Noel Henderson) with incumbent director, David Webster, holding his position. One time Chairman, Wally Merriman, failed in his bid to be re-elected and Haddon Rig principal, George Falkiner, also was unsuccessful in his bid for a spot on the board. Fremantle’s firming market on Thursday bodes well for next week’s sale but how much will it rise??

Southern Aurora Fwd Prices              

Micron

Date

Low

21

December 19

1720

Main Buyers (This Week)

1

Techwool

5147

2

Endeavour Wool

2845

3

Aust. Merino

2679

4

Fox & Lillie

2623

5

Kathaytex Aust.

1830

6

PJ Morris Wool

1373


Eastern Market Indicators (AUD cents/kg clean)

155 cents ê 19 cents compared with 15/11/2019


Northern Market Indicators (AUD cents/kg clean)

1591 cents ê 19 cents compared with 15/11/2019

   

AUD/USD Currency Exchange

0.6795 ê 0.0003  compared with 15/11/2019

15 November 2019

Friday, November 15, 2019

 WEEKLY MARKET REPORT 

Week Ending 15th November, 2019

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S20/19

This Week

M20/19

Last Sale

S19/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2027

1984

1978

+49

2445

-418

18

1920

1894

1875

+45

2278

-358

19

1818

1811

1776

+42

2104

-286

20

1773

1763

1725

+48

2057

-216

21 1763n 1738 1713n +50 2048 -285
26 1204n 1215 1204n 0 1140n +64

28

910n

918

919n

-9

760

+150

30

-

724

728n (M)

-4 (M)

684 (M)

+40 (M)

MC

1053n

1062n

1055n

-2

1100

-47

JUST LIKE A BROKEN RECORD!!

The wool market continues to do the same thing, up and down, this time over the very short period of this week’s sale as the sale started with a bang and lost ground on the final day. Since September the pattern has been 2 or 3 days of gains followed by losses over the same period of time. Again it was a case of “rising too high too quickly” as most fleece types ascended by 45 to 65 cents only to lose up to 20 cents in the last session. By week’s end the AWEX EMI had lifted by 19 cents to 1574 with just a 2 cent rise in US$ terms to 1070 as the A$ lost ground to all major currencies to fall below 68 cents with all microns adding 35 to 50 cents across the merino fleece spectrum. Skirtings fared better than their fleece counterparts as the opening day’s lifts were maintained to see a 30/40 cent gain for all types with the < 17.5, low VM lots 40 to 60 cents to the good. Cardings recorded very little change as LKS were in buyers’ favour to have the MCI give up 2 cents to 1053. Crossbreds also had a flat sale as > 27 micron fell by 10 cents with all other types firm.

The market is like a broken record doing the same thing week after week but the volatility of price shifts has narrowed. In August/September the shift was 100 cents or more but the past 6 sales has seen the EMI move either way 25 to 40 cents bar one rise over 2 weeks that added 75 cents, this narrowing price adjustment much more palatable for buyers.

Volatility remains the bugbear of all in the processing pipeline. Exporters’ margins are savaged by the magnitude of the daily price shifts leading to a conservative “just in time” approach if they can’t cover their forward risk. This, in turn, reduces efficiency in the pipeline and disrupts a smooth flow of product which can constrict consumer demand.

Australian buying houses led the way followed by Chinese indent buyers and selected top-makers but, as the opening day’s levels rose beyond downstream users’ comfort zone, the inevitable pull back in price saw support drift on the final day seemingly now making the 2/3 weekly changes closer to erratic daily swings of price.

The AWI AGM will be held next Friday. Voting closes for the 3 spots on the board next Wednesday at 10am. Postal votes should be in today’s mail with online voting open up until 10am, Wednesday. The AGM will be webcast, go to www.wool.com/about-awi/how-we-consult/annual-reporting/ to watch. The scheduled 40,000 bales rostered for next week and the softer market on Thursday might put prices under pressure to hold their levels.

Southern Aurora Fwd Prices              

Micron

Date

Low

21

December 19

1740

Main Buyers (This Week)

1

Techwool

5068

2

Fox & Lillie

3970

3

Endeavour Wool

2980

4

PJ Morris

2632

5

Aust. Merino

2484

6

Tianyu Wool

2111


Eastern Market Indicators (AUD cents/kg clean)

1574 cents é 19 cents compared with 08/11/2019


Northern Market Indicators (AUD cents/kg clean)

1610 cents é 27 cents compared with 08/11/2019

   

AUD/USD Currency Exchange

0.6798 ê 0.0067  compared with 08/11/2019

8 November 2019

Friday, November 08, 2019

WEEKLY MARKET REPORT 

Week Ending 8th November, 2019

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S19/19

This Week

M19/19

Last Sale

S18/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1978

1967

1992

-14

2495

-517

18

1875

1858

1928

-53

2318

-443

19

1776

1788

1848

-72

2109

-333

20

1725

1728

1800

-75

2050

-325

21 1713n 1726 1782 (M) -56 (M) 2043 -330
26 1204n 1205 1233n -29 1143n +61

28

919n

910

959n

-40

745n

+174

30

693n

728n

733n

-40

636n

+57

MC

1055n

1064n

1086n

-31

1020

+35

THE SAME PATTERN CONTINUES!

The market kept going on its rollercoaster ride this sale as predictions of a cheaper market after the opening day last week rang true as the quick price ascent was never going to be maintained. The previous 3 sales before last week’s big rise had seen the market average a 29 cent shift either way which, to all participants in the trade (most importantly processors), was quite acceptable and business was done without too much angst for grower or processor. Last sale’s rapid rise and the FRX upward shift put paid to this week’s market from the opening lot as the cheaper market in Fremantle last Thursday was a precursor.

The saving grace for sub 18.5 micron was based purely on the superior style types on offer for this week`s designated superfine sale with only the very odd lot attracting solid premiums with most falling by up to 50 cents. 19 micron and broader took the brunt of the losses, most microns giving back 70 to 80 cents more than last week’s gains. Skirtings weren’t as adversely affected as low VM types lost 10/15 while poorer, burrier lots fell by 20/30 cents. After last week’s massive lifts cardings losses were minimal, all types in this sector retracting by 10 to 20 cents bar carbo LKS, back by 30\50 cents. Crossbreds also came under demand pressure to contract by 30 to 60 cents - not quite all of last sale’s gains.

So the rollercoaster continues. The market cannot seem to crack the 1600 cent barrier – has reached 1594 cents last sale and back to 1555 this sale, a loss of 39 cents. The AWEX EMI has been stuck in the 1500 cent range for some time now and buyers are unable to let it go to 1600 and beyond. Is this level comfortable for processors? At the moment it does look as though1600 cents is the upper limit they can operate at and sell to downstream users where everyone is making money. The erratic rises and falls hurt all pipeline participants as we have seen since August. Up or down the staircase is far better for all to operate in rather than the elevator speed that the market has been on in some weeks since sales resumed in August.

As has been the case for some time Fremantle’s Thursday market dictates what will happen next week and the solid market yesterday (up by 10 cents) gives hope that the market should be solid to sellers’ favour next week if recent history is any sort of guide. Just a reminder that all who are eligible to vote in the AWI elections must send their postal voting papers by next Friday to arrive by the cutoff date. If voting via email votes must be submitted by Wednesday 20th November. Directors urge everyone to vote.

Southern Aurora Fwd Prices              

Micron

Date

Low

21

November 19

170

Main Buyers (This Week)

1

Techwool

4304

2

Endeavour Wool

2462

3

Tianyu Wool

2412

4

Aust. Merino

2231

5

Fox & Lillie

2216

6

PJ Morris

1729

Eastern Market Indicators (AUD cents/kg clean)

1555 cents ê 39 cents compared with 01/11/2019

Northern Market Indicators (AUD cents/kg clean)

1583 cents ê 43 cents compared with 01/11/2019

   AUD/USD Currency Exchange

0.6865 ê 0.0063  compared with 01/11/2019

1 November 2019

Friday, November 01, 2019

WEEKLY MARKET REPORT 

Week Ending 1st November, 2019

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S18/19

This Week

M18/19

Last Sale

S17/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1992

1971

1922

+70

2555

-563

18

1928

1912

1865

+63

2377

-449

19

1848

1844

1789

+59

2238

-390

20

1800

1784

1748

+52

2153

-353

21 - 1782 1743n (M) +39 (M) 2126 (M) -344 (M)
26 1233n 1238 1160n +73 1189n +44

28

959n

959

889n

+70

778

+181

30

733n

755

675n

+58

661n

+72

MC

1086n

1076n

987n

+99

1045

+41


NUMBERS LOOK GOOD BUT VOLATILITY TO CONTINUE!!

The promise of a dearer market late last week was spot on as buyers chased wool from the opening lot. Sydney’s market had to play catch-up after its 1 day sale last week but all centres rose more than expected as all fleece microns gained 50 to 75 cents on the opening day then leveled out on the final day. Skirtings had an excellent sale as broader types jumped 40/50 cents while < 18 micron climbed by 70 to 90 cents. XBs also benefitted from the increase in demand up by 60 to 80 cents while the MCI added 100 cents as all types in this sector skyrocketed by 80 to 110 cents.

While any rise in any commodity is welcome, price volatility is always a concern as the past 12 weeks has demonstrated. This sale’s rise was widely tipped but after the opening day’s rises most talk was “gains went too high too fast” and  the shift in the FRX to well above 69 cents was too much as Fremantle’s market pulled back by 20 cents on Thursday - a certain sign of things to come here next week. The sudden upward shift in the A$ came after the first phase of a trade pact with China and the US could be signed ahead of schedule and the US Federal Bank dropped interest rates to 1.5% which resulted in the US stock market setting a new record high. The widely volatile market has auctions highly reactionary to immediate demand (both positive and negative) as buyers don’t want a heavily exposed open position and execute purchasing promptly without price limitations. The +/- 20 cent movements over the previous month has had both sides of the trade (buyers & sellers) confident in what they were doing but the big shift in prices makes trading difficult.

The end of the month saw the release of testing figures from AWTA. October saw a 4.2% fall compared to last October and the progressive total from July to now is 11% less than the same period last year. The volume of wool offered for the current season is 16% (89,400) less than last season - these figures certainly not to improve any time soon. AWI AGM will be held in 3 weeks and voting is under way for the 3 vacant positions on the board from a field of 8 candidates. All shareholders eligible to vote should have received their voting papers by now (electronically or by mail) and are urged to vote from now. If you cannot attend the AGM you will need to appoint a proxy for the meeting. Don Macdonald will be happy to again carry your proxy in what will be a very important election of 3 new board members. As we mentioned earlier we could see a cheaper market next week.

            Southern Aurora Fwd Prices

Micron

Date

Low

21

November '19

1760

Main Buyers (This Week)

1

Techwool

5737

2

Fox & Lillie

4214

3

Endeavour Wool

3160

4

PJ Morris

2489

5

Aust. Merino

2245

6

Tianyu Wool

1844

Eastern Market Indicators (AUD cents/kg clean)

1594 cents é 49 cents compared with 25/10/2019

Northern Market Indicators (AUD cents/kg clean)

1626 cents é 66 cents compared with 25/10/2019

   AUD/USD Currency Exchange

0.6928 é 0.0080 compared with 25/10/2019