Weekly Market Reports


27 November 2020

Friday, November 27, 2020

 WEEKLY MARKET REPORT

Week Ending 27th November, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S22/20

This Week

M22/20

Last Sale

S21/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1844

1824n 1806
+38 1980 -136

18

1560

1576

1570

-10

1863

-303

19

1377

1378

1386

-9

1744

-367

20

1234

1231

1229

+5

1713

-479
21 1178n 1167 1188n -10 1716n -538
 26 768n 783 798n -30 1168n -400

28

490n

488

559n

-69

855n

-365

MC

734n

746n

704n

+30

1054

-320

OUR RELIANCE ON CHINA GROWS!

This week’s sale played out as the several sales beforehand have done in regards to volumes and withdrawn wool and passed-in rates. The anticipated national catalogue of 41,500 bales never eventuated with 12% (5,000 bales) withdrawn prior to auction and, with a flat market, the passed-in rate dropped to 12% from 19% last series to have just 32,000 bales cleared to the trade - hardly a supply overload. For the 2nd time in the last 3 sales the AWEX EMI was restricted to single figure movements, just a 9 cent fall to 1150. With the strengthening FRX to 73.50 cents the market added 2 cents to its value in US$ terms to 846. It was a tale of 2 markets as merinos were mostly unchanged to dearer while the XB sector fell out of favour to suffer big falls. The fleece market started on a cheaper note but did finish the sale strongly with the inferior style types with poor test results (low yields, tender, high mid-breaks and high CVHs) dragging some MPGs into the red. With a designated super-fine sale in Sydney the superior offering saw 17 micron and finer add 25 to 40 cents and more (60/80) as the style improved while all other microns were 15 cheaper to sellers’ favour. All descriptions of skirtings added 10/20 cents from the previous series while cardings recovered all of last sale’s losses as all types in this sector climbed by 15 to 60 cents, the MCI adding 30 cents to 734. Crossbreds were the disappointing sector of the sale and directly contributed to the EMI losing ground. Finer than 26.5 micron fell by 30/50 cents while the broader types were hammered losing 50 to 80 cents with some individual microns falling by over 15%. Buying interest was from across the board from processors to indent operators and traders. When prices lowered or were filled in the opening session there was a quick buyer replacement that stepped in to maintain good competition and price levels indicating a strong book of orders for now.

Have we come to a new price level?? Taking out last week’s 30 cent fall the market, either side of that has barely moved. For the moment the wild volatility seems to have gone but the past 5 sales (10 auction days) has seen the EMI move 560 cents (up and down) a daily average shift of 56 cents. Over the past 3 weeks though the EMI has moved between 1189 and 1150, a 39 cent movement and taking out 2 days when the EMI was at 1188/1189 the shifts have been restricted to 1150 to 1161, a very tight price range.  What does this mean? Have we reached a price point that the wool pipeline is happy with and can all successfully pass on prices at a profitable level? Or are we in a holding pattern till the next upward shift (fingers crossed) or will  the 2nd wave of the pandemic in Europe and the seemingly out of control status in the US stifle demand  due to lockdowns and falling retail activity just when they are on their knees begging for some sort of global Christmas spending recovery. Or will health authorities give the green light to the 4/5 vaccines that are trialing with 70 to 90% success rate. There are reportedly 10s of millions of doses already produced awaiting approval - some maybe before Christmas. We can only hope.

Our reliance on China as a market this season has grown with them now taking 83% of the clip with the next 3 countries (India, Italy and South Korea) buying 8%. The recent “Singles Day” online shopping extravaganza saw $115 billion of merchandise change hands on just 2 major platforms - Alibaba and JD. Hopefully there is some restocking of retail shelves to happen. The importance of the well-heeled Chinese consumer has never been more important. Their woolen clothing purchases for 2019 of 125mkg is more than the next 3 countries combined, USA, Japan and Germany at 115 mkg. Next week’s offering of 41,800 will not make it to auction unless the market finds a new level.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Mar/Apr 21

1120

Main Buyers (This Week)

1

Techwool

4916

2

United Wool

3168

3

Endeavour Wool

3078

4

Fox & Lillie

1896

5

Aust. Merino

1803

6

Tianyu Wool

1659

Eastern Market Indicators (AUD cents/kg clean)

1150 cents ê 9 cent compared with 20/11/2020

Northern Market Indicators (AUD cents/kg clean)

1209 cents ê 5 cents compared with 20/11/2020

   AUD/USD Currency Exchange

0.7357 é 0.0071 compared with 20/11/2020

20 November 2020

Friday, November 20, 2020

 WEEKLY MARKET REPORT

Week Ending 20th November, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S21/20

This Week

M21/20

Last Sale

S20/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1806

1824n 1845
-39 2008 -202

18

1570

1578

1605

-35

1885

-315

19

1386

1376

1413

-27

1781

-395

20

1229

1228

1278

-49

1738

-509
21 1188n 1174 1226n -38 1729n -541
 26 798n - 838n -40 1200n -402

28

559n

561

600n

-41

899n

-340

MC

704n

768n

731n

-27

1052n

-348

PRICE DIRECTION IS ANYONE’S GUESS!!

The wool market didn’t quite go to script this week as sentiment changed from late last week to pre-sale. Futures trading indicated par to +20 but most exporters were talking the market down before the sale commenced. The talk was spot on as the opening session had all fleece microns giving up 30 to 50 cents. The final day saw a distinct change in sentiment as the market steadied to see some types in sellers’ favour to finish the sale 20 cents lower than the previous week.  Skirtings couldn’t do what the fleece sector did with no second day recovery as falls over the entire sale saw all types and descriptions drop by 40 to 70 cents. Cardings continued to fall as fine LKS < 17.5 micron gave up 65/80 cents with the broader types and CRT & STN 20 to 40 cents cheaper. The MCI lost 27 cents to sit at 704 - the 4th week in a row it has lost ground from the 811 cent high in October - a 107 cent reduction. Crossbreds also continued to lose ground from their highs of 4 weeks ago. All types from 25 to 32 micron fell by 30 to 60 cents and now all about 100 cents from the peak of a month ago. The A$ finished the sale slightly lower than where it was early in the week (73.25), this a factor in the softening prices on the opening day coupled with the anticipated 40,500 bale offering. The AWEX EMI fell by 30 cents to 1159 and lost 24 cents in US% terms to 844 cents.

Most prompt orders had been seemingly covered by exporters last week to leave buyers in a “holding” pattern early in the sale as they waited on a clear price signal from overseas or new business to be written or the market to fall to  new bid levels that downstream users would be happy with to negotiate new business at these price levels. The final days’ price stability coming from a conservative purchasing mode to buy to price advantage rather than accumulate inventory. One of the large Chinese topmakers (Tianyu) looked to ramp up their buying of merino fleece this week to dominate with 20% of the offering, with the next 2 buyers on the list securing 21% between them (Techwool and Endeavour). Traders and 1st stage manufacturers kept pace with the dominant topmaker in the opening session but was outgunned on the final day. Once again the volume of wool to be offered and what actually made it to sale and eventually sold again were worlds apart. The original offering of 40,500 bales failed to make it to auction with over 10% (4,200) withdrawn and, with the falling market, 20% was passed in leaving 29,100 actually sold to the trade. General consensus is that a figure of 40,000 bales/week is enough for current demand to handle but anything over this becomes problematic for exporters to handle. Only 4 sales this season have had a predicted national catalogue of over 40,000 bales and the end result being 10/15% withdrawn and the largest catalogue adding up to 37,500 bales. Next week should be the same with 41,500 rostered but about 37,000 to be actually offered. Surely the Chinese must realise now that the anticipated volume never makes it to sale. Market direction is anyone’s guess depending on which price pattern is followed - weekly or daily movements.

The Responsible Wool Standard (RWS), a farm certification system, has been a growing force in the marketplace of recent times. Big name European and American brands are not only asking for non-mulesed but requesting it with RWS certification. On behalf of our clients we have joined with the Schneider Wool of group of Italy and this week we were the first to be audited in the group’s scheme which includes a couple of other brokers from other regions and states. Around a dozen clients have signed up with the remaining audits to happen between now and Christmas.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Jan/Feb 21

1120

Main Buyers (This Week)

1

Tianyu Wool

4116

2

Techwool

3286

3

United Wool

3174

4

Endeavour Wool

2551

5

Lempriere

1779

6

Aust. Merino

782

Eastern Market Indicators (AUD cents/kg clean)

1159 cents ê 30 cent compared with 13/11/2020

Northern Market Indicators (AUD cents/kg clean)

1214 cents ê 38 cents compared with 13/11/2020

   AUD/USD Currency Exchange

0.7286 ê 0.0021 compared with 13/11/2020

13 November 2020

Friday, November 13, 2020

 WEEKLY MARKET REPORT

Week Ending 13th November, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S20/20

This Week

M20/20

Last Sale

S19/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1845

1838 1808
+37 2027 -182

18

1605

1570

1578

+27

1920

-315

19

1413

1391

1393

+20

1818

-405

20

1278

1259

1259

+19

1773

-495
21 1226n 1225 1208n +18 1763n -537
 26 838n 840n 838n 0 1204n -366

28

600n

613

615n

-15

910n

-310

MC

731n

781n

764n

-33

1053n

-322

DAY-TO-DAY VOLATILITY – UNHEARD OF!!!

When looking at the market reports for this week’s sale the barest movement in the AWEX EMI of just one cent ascendency to 1189 would suggest the market was pretty stable, something that both sides have been seeking for some time. A closer look at actually what happened tells a very different story. After the final day’s cheaper trend in the last series (if previous weeks’ patterns were any guide), this week’s market was going to be falling by some major margins. By the time the opening lot was due to be sold this savaging of the market was not going to be as bad as was first predicted with spatterings of business done. Fleece prices ranged from 20 to 50 cents back in the first session (showfloor chatter had the losses between 60/80 cents). The final day of selling brought hope of a recovery as Fremantle’s market barely moved and finished par to 20 cents higher than the Eastern Seaboard prices on the opening day. All centres recorded good gains to finish the sale on a strong note. 18.5s could only manage a 1 cent gain for the week while all other microns rose by 20 to 40 cents and, in some cases, a 100 cent turnaround from day to day in identical types. As mentioned earlier it was just a 1 cent gain to 1189 for the EMI. In US$ terms the rise was 16 cents to 869 due to the global strengthening of the greenback on the US election result. Our FRX was up by 2% to 73.10 cents but this didn’t seem to adversely affect the market. Skirtings finished to the good after the roller-coaster ride like the fleece wools. Finer types < 17.5 finished the sale on a firm note with broader lots 10/20 cents higher than the previous sale.  Cardings, unlike their merino combing counterparts, had failed to recover their opening day’s losses with most types falling by 20 to 30 cents. The MCI gave up 33 cents to 731. This large loss for cardings the contributing factor the EMI could only add 1 cent. Crossbreds also couldn’t recover all the opening session’s losses with 26 micron and finer unchanged and broader microns back by 20 to 30 cents for the sale.

The volatility continues unabated not from week to week but, for the past 2 sales, day to day. The wool trade is no stranger to big price swings and volatility but the magnitude of the recent price movements has been on a scale that even veterans of the trade have not seen. This is indicative of current strategies of minimal to zero risk appetite of stock of forward exposure by both seller and buyer. The sudden change in sentiment late in the opening session saw a good recovery in most sectors led by renewed Chinese enquiry seemingly, for the moment, shrugging off the worry and fear that wool could be caught up in trade embargos between our two countries that is involving a raft of exports and uncertain future for some commodities. AWTA figures for October were released with an 18% fall in weight of wool tested when compared to the same month in 2019. The progressive total for the season (July to October) is back by 11.4% (10.8mkg less), 84.8 to 95.6mkg. The amount of wool offered is slightly lower than last season - 8,620 bales (1.6%).

The news of the likely outcome of the US election and, more importantly, news of several vaccines having a 90% success rate in trials being conducted and release dates either side of Christmas sent stock markets and commodities climbing as infection rates in the US climb and Europe is trying to combat the 2nd wave with another round of restrictions and lockdowns. The mass release of a vaccine can’t come quick enough. 40,000 bales are on offer next week and, if futures trading is any guide, firm to 20 cents higher is the most likely outcome.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Jan/Feb 21

1180

Main Buyers (This Week)

1

Techwool Trading

4709

2

Endeavour Wool

3987

3

Tianyu Wool

3495

4

Lempriere

2239

5

United Wool

2535

6

PJ Morris Wool

2461

Eastern Market Indicators (AUD cents/kg clean)

1189 cents é 1 cent compared with 06/11/2020

Northern Market Indicators (AUD cents/kg clean)

1252 cents é 7 cents compared with 06/11/2020

   AUD/USD Currency Exchange

0.7307 é 0.0130 compared with 06/11/2020

6 November 2020

Friday, November 06, 2020

 WEEKLY MARKET REPORT

Week Ending 6th November, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S19/20

This Week

M19/20

Last Sale

S18/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1808

1810n 1741
+67 1978 -170

18

1578

1579

1516

+62

1875

-297

19

1393

1374

1313

+80

1776

-383

20

1259

1270

1191

+68

1725

-466
21 1208n 1208 1158n +50 1713n -505
 26 838n - 803n +35 1204n -366

28

615n

623

593n

+22

919n

-304

MC

764n

774n

778n

-14

1055n

-291

WILD VOLATILITY SET TO CONTINUE!!!

The market correction we spoke of in our last report was indeed swift but, on the flipside, the downward trajectory that usually follows the large upward jolt was just as quick. The volatility in the market has everyone bamboozled as now the day-to-day wild movements in the market are impossible to predict and harder to keep up with. The market roared away in the opening session only to give back half of the first day’s gains on the 2nd day. We have been fortunate enough to sell on the “dearer” days when the market has lifted significantly over the past few sales. All microns added triple figures to their values on Wednesday (100 to 135) only to give up 40 to 60 cents in the closing session. This saw the AWEX EMI ascend by 50 cents to 1188 for the sale with a 40 cent rise in US$ terms to 853. The slight fall in the FRX early in the week may have assisted the market but then the rise later in the week certainly helped the buyers pull the market back. THE A$ sits well above 72 cents on Friday morning - not a good sign for next week with the national catalogue at 42,000 bales.

All fleece microns finished the sale 50 to 80 cents higher but, looking at the quotes, some identical types had up to 100 cents difference in price from day to day. There was a similar pattern in the skirting sector but, for 17.5 and finer, these types managed to hang on to their 110 to 130 cents gains on the first day with broader lots rising and falling over the course of the sale to finish the week 30 to 40 cents to the good. Cardings also told a similar story to their merino combing counterparts - up on the opening day only to fall more than the initial gains in the final session as the 3 MCIs lost an average of 19 cents as all types in this sector were 10 to 20 cents cheaper. Crossbreds followed a similar pattern to the merinos with good rises on the opening day only to adjust downwards in the final session to finish the sale 20 to 30 cents higher. The passed-in rate fell from last week’s high of 26% to 9% this week (2.6% on Wednesday and 15% on Thursday when the market fell).

The current volatility we are experiencing has been nothing like we have seen before, certainly not to this extent. Over the past 10 selling days, stretching back to early October, the market has moved in total by 466 cents (an average of 46 cents/day). The current purchasing pattern of stepping in and buying like there’s no tomorrow then taking a “sit on the fence and wait approach” to let the market lose all the ground it gained the day or week before is frustrating to all in the industry here and complexing as to how the Chinese can make money when the market is fluctuating so widely within the space of days and weeks. Planning to offer wool on hold is now becoming a lottery as picking a market that might remain solid after a good rise is nigh on impossible as current volatility now rules out any ideas of where the market might be in a week or two.

Also on the horizon is the re-emergence of the pandemic in Europe. Britain went back into lockdown last night with only essential services operating. The inability of consumers to go out and spend money could cruel some EU economies that were getting back on their feet. This could put the wool market’s recovery in a tailspin if Europeans can’t spend in what is one of our most important markets as the big Christmas spending period is approaching fast and a northern hemisphere winter is very close, a peak period for consumers to buy woolen products. As we said earlier 42,000 bales are on offer next week and the cheaper pattern on the final day of this week’s sale looks set to continue next sale.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Jan/Feb 21

1150

Main Buyers (This Week)

1

Techwool Trading

5104

2

Endeavour Wool

3093

3

Lempriere (Aust)

2869

4

United Wool

2239

5

PJ Morris Wool

1289

6

Tianyu Wool

992

Eastern Market Indicators (AUD cents/kg clean)

1188 cents é 50 cents compared with 30/10/2020

Northern Market Indicators (AUD cents/kg clean)

1245 cents é 55 cents compared with 30/10/2020

   AUD/USD Currency Exchange

0.7177 é 0.0033 compared with 30/10/2020