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WEEKLY MARKET REPORT Week Ending 22nd February, 2019 AWEX Northern Micron Indices Comparison
A DRAMATIC WEEK! A dramatic week for wool sales globally as South Africa suspended this week’s sale because of the import suspension of their greasy wool to China due to the Foot and Mouth outbreak in January. This led to a major price lift in our market as purchasing orders in SA shifted east across the Indian Ocean to Australia resulting in the AWEX EMI jumping by 59 cents to crash through the 2000 cent barrier to 2027. In US$ terms the rise was just as significant, 50 cents to 1451 as the FRX was stronger trading 71.5 to 72 cents. All fleece types had good gains, 19 micron and broader the best performers, up by 80 to 100 cents while < 19 gained 35 to 50 cents. Skirtings sold to a dearer trend to the tune of 40 to 80 cents depending on type, micron and VM %. Cardings also continued on their merry way as the 3 centres averaged a 33 cent climb with all types in this sector up by 20/40 cents. Crossbreds were also caught up in the buying frenzy; most microns were 40 to 75 cents to the good. One of our XB clips averaged 670 cents/kg to gross $1212/bale (FLC, SKTS and LMS). Even though the FMD outbreak occurred in the remote north in a cattle herd far from any sheep, the suspension of wool sales came out of left field with no consultation with growers. The market was tipped to be dearer here but with the SA decision panic set in and our market took off. Over-reaction?? Maybe, as SA produce about 250,000 bales of wool/year, 2% of global wool production and 6% of merino, almost entirely < 22 micron with 68% exported to China. A meeting between Cape Wools, the governing body, wool buyers and wool grower bodies have decided to hold next week’s sale but almost certainly without Chinese mills operating. SA wool buyers have warned of a sharp fall in their market next week given the reduced saleroom competition. The extent of the drought can be seen in the latest export figures to December 2018. Australian wool exports are back by 18% when compared to the previous season with SA down by 17% and NZ, Argentina and Uruguay all falling by 5 to 7%. As a result our major importing countries are down on their volume of wool: China and Czech Republic by 20%, Italy 14% and India 5% but Germany up by a whopping 66%. Next week sees increased volume for sale here with 49,700 bales (up from 41,300 on Monday) as growers rush wool onto the market and in SA this sale’s cancelled offering and next week’s quantity has Chinese processors worried that their ability to absorb the elevated volume will be tested even though they may not buy a bale in SA. Ag Concepts Fwd Prices as at 22 February 2019
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Weekly Market Reports
22 February 2019
15 February 2019
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WEEKLY MARKET REPORT Week Ending 15th February, 2019 AWEX Northern Micron Indices Comparison
CROSSBREDS BREAK NEW GROUND!
The gradual increases continued this week as the AWEX EMI ascended by 24 cents to 1968. This rise saw the Sydney indicator break through the 2000 cent mark to finish the series at 2011. This week’s rise was the 7th straight sale that the EMI has moved higher, adding 107 cents since sales resumed in January. The medium microns (19 to 22s) were the notable performers, gaining 10 to 25 cents while the sub 18.5s added 5 to 10 cents. The stable FRX helped the market as the EMI in US$ terms lifted by 21 cents to 1401. Skirtings had an excellent sale as all types were quoted 30 to 50 cents higher. The 3 week run of falls was halted in the carding sector as rises of 15/20 cents for STN/CRT and 30 to 40 cents for LKS had the 3 regional MCIs average 25 cent gains. The highlight of the sale was the record breaking crossbred sector as gains of up to 50 cents has the 28 and 30 micron indicators in an all time record territory at 1080 (1103 in Melbourne) and 928 respectively. Recording of these indicators goes back to the days of the AWC market reporting that commenced in 1979, 40 years ago. Melbourne hosted a “Tasmanian origin” sale this series the largest weekly offering of wool from the Apple Isle for 2 years. The superior selection was met with strong competition dominated by Italy to see some lots up to 150 cents higher than their indicators but still have the MPGs in Melbourne < 18.5 averaging 44 cents lower than Sydney. On the flipside of quantity, Sydney’s fleece offering on Thursday was the smallest in 12 months and the weekly total is the least in 5 years as national yearly offerings are 179,000 bales (14.8%) lower than last season. Even though global wool supply is expected to decline by 12% this season, most mills are reportedly looking to restocking greasy wool for the Autumn/Winter Northern Hemisphere season. Global events that were thought to have an adverse effect on prices have not yet impacted as textile and apparel goods exported from China had a 3.5% increase in 2018. Retail figures from the US show the worst consolidated sales in 10 years for clothing - a worrying stat as 14% of our wool ends up in the US. Will the market rise for the 8th straight week? Time will tell! Ag Concepts Fwd Prices as at 15 February 2019
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8 February 2019
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WEEKLY MARKET REPORT Week Ending 8th February, 2019 AWEX Northern Micron Indices Comparison
BIG VOLUMES, CHINESE NEW YEAR, NO PROBLEM! Sellers in this sale were nervous about offering wool as our biggest customer celebrated their Chinese New Year. The China Australia working group Chinese representative had made a request on behalf of mills in China to consider a sale recess for this celebration but was denied due to a disruption of the orderly trading of wool so soon after the 3 week Christmas recess. There were no repercussions from China as a solid start on the opening day led to more vigorous bidding on the final day as the AWEX EMI added 10 cents to its previous value to sit at 1944 cents. This was the 1st designated super-fine sale of the year and buyers were impressed by the superior selection on offer to push the 18 micron MPG and finer ahead by 60 to 80 cents and more for some specially selected types. Broader microns than 18s gained 10 to 20 cents. The weaker A$ against the US$ by 2.33% certainly helped the market this week. Skirtings had a solid sale as no real movement in either direction was evident except for the very stylish types that attracted premiums of up to 50 cents. Crossbreds took a breather from their meteoric rises since Christmas to lift by 10 to 40 cents. Cardings also took on a steady approach as again LKS cheapened by 20/30 cents in the opening session then steadied on the final day as the Fremantle carding market gained 10 to 25 cents on Thursday to maybe steady this sector. Since the market opened with a bang 5 weeks ago, the market has flat-lined, operating in a 34 cents band (1910 to 1944). Concerns over the large volumes in the 2 opening sales and Chinese new year had most sellers worried but we look to have weathered that storm this sale as weekly quantities are now firmly entrenched in the mid to high 30,000s for the foreseeable future. All participants, from growers to cloth finishers, are very aware of the supply shortfall of merino wool by about 15% due to the mother of all droughts in eastern Australia and spreading to South Africa. As a result global wool textile manufacturing is set to decline by a similar % over the next few months as demand is steady and China’s slowing growth, the Brexit debacle and the US/China tariff wars could stagger any price rises into the future despite demand still being okay and supply dwindling. Ag Concepts Fwd Prices as at 8 February 2019
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1 February 2019
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WEEKLY MARKET REPORT Week Ending 1st February, 2019 AWEX Northern Micron Indices Comparison
HAPPY CHINESE NEW YEAR … HOPEFULLY! The wool market plodded along this week with mixed results in all 3 centres as national weekly offerings are now averaging 40,000 bales following on from the 2 big opening sales of the new year. The AWEX EMI pushed ahead by 7 cents to 1934 with most microns moving by single figures either way in Sydney. In US$ terms the EMI added 33 cents to 1405, this due the rising A$ as the sale progressed, up by 1.5 cents (2.2%) for the week. With the volume of drought affected wool increasing each sale only the long, low VM higher yielding types are immune from any major price discount. Buyers are finding it harder to place the burrier, tender, short and sub 60% yielding fleece types and are adjusting prices accordingly as only the best types attract solid premiums. Skirtings also improved by modest margins - 10 to 20 cents for most types bar the very high VM lots. Again LKS weighed heavily on the carding sector as < 17 micron types were reduced by 30/50 cents with STN giving up 20 to 30 cents. The best performing of all sectors were the XBs. After an excellent opening 2 sales they were in hot demand again as finer than 26 micron added up to 50 cents while 28/30s climbed by 100 cents as some exporters are blending these with fine wools - the reason for the renewed interest as 28 micron is at a 5 year peak. The 2 fundamentals that remain in place (supply and demand) will dictate above all which way the market goes but we do face some headwinds. The market looks to be coping with the FRX fluctuations as this sale demonstrated although new forward business is hard to come by at current market levels given the quality of wool on offer as processors try to balance the need to keep machinery running and the inability to pass the current price levels to downstream customers. Some overseas manufacturers are looking to other sources to continue processing but the move to blending XBs with merino rather than a shift to blend synthetics is working thus far. The ongoing US/China trade war, the messy Brexit in Europe and the slowing Chinese economy could all play their part at some stage on wool prices. AWTA reports that 12% less wool was tested in January 2019 compared to the same month last year and wool sold year to year is 19% (201,000) lower than last season to date. As we approach Chinese New Year, most pundits forecast good types to hold while off style wools could struggle. Ag Concepts Fwd Prices as at 1 February 2019
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