WEEKLY MARKET REPORT 

Week Ending 20th December, 2019

 AWEX Northern Micron Indices Comparison

CONFIDENCE IS KING!!

Last sale’s upward shift in the market accelerated this week - the final sale before the 3 week recess. The AWEX EMI rose by 55 cents to 1558 and 32 cents in $US terms to 1066 despite the FRX staying well above 68 cents. Buyers were keen from the get-go with large increases in the opening session followed by a more measured approach on the final day but still good gains. All fleece microns posted gains of 75 to 95 cents regardless of style or any faults. Skirting’s were also in good demand as buyers pushed all types in this sector 60 to 90 cents higher. Crossbreds were also keenly sought after as most microns added 60/70 cents. The only sector to not explode in prices was cardings. Sydney and Fremantle averaged 20 cent rises while Melbourne lost 7 cents to have the 3 centres’ average price at 1070.

Despite the anticipated large offering (39,400), the high FRX and shipping logistics delays, the market had its largest weekly increase for 12 sales. The final volume offered was 12% lower than originally rostered due to a high withdrawal rate and with no chance to buy any meaningful quantity till mid January buyers were under pressure to fulfil outstanding commitments from the reduced selection on offer.

This year, particularly the final 6 months, has been one of the toughest periods for all in the industry. Firstly growers are still combatting the worst drought for over 100 years, massive reductions in sheep numbers, poor quality wool and a drop in the market of 17% (1862) from 12 months ago to 1558. The peak of the market was in mid February at 2027 and the low point was early September when the EMI got down to 1365, a 33% swing. At the high point in February just 252 cents separated 17 from 21 micron (2620 to 2368). At the cheapest point of the year the spread wasn’t much wider, 17s at 1842 and 21s were 1487 - a 355 cent difference. Exporters have had a year to forget as well. The high prices from last year into 2019 proved unsustainable as global events that we have spoken about in several reports conspired against them as consumer demand weakened. The market’s demise started in May and peaked in August, falling 163 cents in a single week only to stage a remarkable recovery in S11 climbing by 170 cents. Buyers, understandably, couldn’t trade with any confidence with such wild swings and are still feeling the effects now. The British election outcome and the softening of trade tariffs have boosted confidence that will hopefully carry on into the new year.

Southern Aurora Fwd Prices              

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 13th December, 2019

 AWEX Northern Micron Indices Comparison

MARKET BACK OVER 1500!!

After 7 straight days of falls adding up to almost 100 cents, the market had an unexpected turnaround as the AWEX EMI posted an 11 cent gain to 1503. Several factors were pointing to further losses for the market: the large offering, adverse FRX rates, the ongoing poor quality and global economic concerns almost certain to lead to a cheaper market. High rates of withdrawn wool (12%, 6000 bales) saw a much more manageable quantity for buyers to handle and some hidden prompt that appeared was all the impetuous the market needed to strengthen.

Despite the small upward adjustment this series was one of the most impressive sales of the season insofar as the big players of each segment dominated, local based traders to China led the merino sector, the biggest top-maker in the world was atop the crossbred sector and the largest global carbo processor was No.1 for cardings and oddments. Most fleece microns added 10 to 25 cents to their values. Skirtings had a mixed sale as the opening sessions’ gains were given up on the last day to leave them just in sellers’ favour for the week. Cardings averaged 19 cent losses across the 3 centres as all types fell by 10 to 30 cents. Crossbreds also had mixed results as < 26 microns were 15 cents lower while broader types added 10/20 cents.

The steadying market was welcome news after 3 weeks of falls and no talk that the market was about to stop its downward trend. Even after the high percentage of withdrawals buyers were faced with the largest catalogue since May but the end result was pleasing to all participants. The national turnover for wool sold passed the $1billion mark this week but it took 7 more sales to reach this milestone than it did last season - a result of the falling market and less wool offered (80,650 bales 10%). In what will be good news for the global economy (and the wool market) the US has agreed to halve tariff rates on $350bn worth of Chinese goods, some of which were as high as 25% and, in return, China would boost purchases of US farm products. This latest agreement should avoid US threats to impose tariffs on more than $150bn worth of Chinese exports that were due to start next week. Stock market reaction was swift as Asian markets rose 2% and Wall Street again set new records. Confidence is a great thing!! The market should end the year on a solid to dearer note for the final sale of the year.

Southern Aurora Fwd Prices              

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 6th December, 2019

 AWEX Northern Micron Indices Comparison

MARKET FALLS UNDER 1500 cents!!

Another tough week for the wool market as the downward trend continued on for the 3^rd sale in a row. Steady falls all week saw the AWEX EMI peel off by 38 cents to fall below the 1500 cent mark to 1492 - its lowest point in 13 weeks, 357 cents lower than this sale last year. In US$ terms the loss was only 15 cents to 1020 somewhat cushioned by the strengthening FRX to 68.5 cents. This ascendency, along with the subdued demand, contributes to the falling market. Losses were most severe in the finer microns, < 18.5 giving up 50 to 70 cents while 19s and broader fell by 30/40 cents with the better style, good spec types less affected while the dustier/tender lots saw the discounts widen on these. Skirtings also took a hammering with all types falling by 50 to 80 cents. The only highlight was the Carding sector which added 7 cents to 1061 while crossbreds lost 20 to 30 cents.

A wane in demand, the logistical headache of shipping wool over the Christmas/New Year period, the timing of the Chinese New Year (25^th January) and a sudden spike in offerings for the last 2 sales of the year are all conspiring to send the market on a downward spiral - 100 cents fall over the past 6 weeks. The large offerings and inability of buyers to deliver wool on time is severely hampering normal buying and shipping activities. This week was, in effect, the final opportunity to ship wool to China for arrival before their New Year shutdown so the large offering at this time is bad timing for exporters and mills. This means a 2 to 4 week additional financing period that is required for exporters for any wool destined for China that is bought over the next 2 sales if delivery is not “prompt”, one week for shipment delay due to Christmas and up to 2 weeks for the Chinese New Year shutdown. The margins are tight at the best of times let alone this situation when hand to mouth modus operandi that all the trade use.

AWTA released their November figures which saw a 1% fall when compared to the same month last year with the progressive total for the year running at 8.5% less wool tested than last season (127.5mkg to 139.4mkg) and 77,175 (10.5%) less bales offered than last season. Next week’s sale (48,500) could be the largest since end of April growing by 9,000 bales (23%) since last Friday, Melbourne’s catalogue ballooning by a massive 27%.

Southern Aurora Fwd Prices              

Main Buyers (This Week)