WEEKLY MARKET REPORT

Week Ending 18th December, 2020

 AWEX Northern Micron Indices Comparison

ANNUS HORRIBILIS BUT … HAVE A MERRY CHRISTMAS!

As the Queen stated at the end of 1992 the year has been “annus horribilis”. The collapse of her 3 children’s marriages and the near total destruction of the much beloved Windsor Castle prompted this statement from her. Fast forward 28 years and the same could be said for 2020 on so many fronts. From devastating bushfires and the continuing drought early in the year and floods that broke the drought and floods now to Covid-19 spreading like wildfire across the globe claiming 1.66 million lives and infecting 75.270 million people on the planet. This year has been like no other in many generations. The wool market continued to be erratic right till the final sale this week. The market gave back nearly all of last series’ gains as the AWEX EMI fell by 41 cents to 1157 the majority of the losses coming in the opening session. The losses in US$ terms was less than half in A$ terms, just 18 cents to 874, this due to the ascending A$ up above 76 cents this morning (a 3 year high against the greenback) a worry for exporters of raw materials. Finer fleece microns < 17.5 fell by 15 to 30 cents with 18s and broader dropping by 45/50 cents. Fine skirtings < 17.5 micron opened cheaper but found solid support in the final session to finish the sale up to 10 cents dearer while the coarser types lost 35 to 55 cents down. There was very little movement in the Carding sector as the MCI lost just 1 cent to 764 with the 3 centres’ MCIs well and truly aligned, 778 to 764. Crossbreds followed the merino combing market to fall 25 to 40 cents for all microns. The passed-in rate blew out to 18%. The big, anticipated offering of 49,000 bales didn’t eventuate with 44,800 being offered (9% withdrawn) combined with the high passed-in rate saw just 36,600 bales sold. One highlight was the highest price in Sydney on our sale day, (3^rd highest for this week’s sale and 7^th highest in Australia this week) was achieved by one of our Carmichael clients, Carla & Darren Hepburn from Delegate, a 2 bale line of 14.9 micron-0.3VM-72.5yld, 90mm-26nkt made 1898 to be processed by Raymond Industries in India.

The EMI level of 1157 is 401 cents below last Christmas’ price of 1558, back by a whopping 25.7%. The year’s peak was in the opening sale of the year in January when it climbed to 1609 with the low point of just 858 cents in early September, a massive swing of a 47%. The volatility seen over many weeks of this year (in particular these last 6 months) has been unprecedented. The largest weekly drop was 155 cents in late March, 1442 to 1287, followed by a 128 cent fall in the resumption of sales in August. The biggest weekly rise was in October when the EMI climbed by 102 cents to 1219. The sale the previous week before saw a 95 cent leap, 197 cents for the fortnight!! Added to this was the disruption to the main software provider, Talman, in February resulting in the cancellation of Sale 35. All of this combined the challenges that the pandemic brought with it that came very close to having wool sales cancelled in Melbourne and all centres adhering to tight government health regulations with non-essential staff and no clients traveling to wool sales and reps unable to visit shed starts added to the pressure of selling wool in very uncertain times.

The wool market was coming off the “Super-cycle” but was exacerbated by the complete collapse in demand once the pandemic took hold. China is showing signs of recovering but our other major wool users have been much slower. The release of vaccines and more to come will give Northern hemisphere governments the confidence to lift lock-downs and restrictions and a return to normal work and consumer spending habits will help get demand for wool back to a good level. Sales are in recess till week of 11^th January. We hope everyone can enjoy a great Christmas and New Year break.

        Southern Aurora Fwd Prices            

Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 11th December, 2020

 AWEX Northern Micron Indices Comparison

MARKET RISES 2 DAYS RUNNING!

The penultimate sale of the year finally delivered some good news for growers as the market strung together 2 consecutive days of gains, something it hadn’t done since mid-October. The AWEX EMI climbed by 54 cents (4.7%) to 1198 - its highest point since early November. The rise was more impressive in US$ terms with the market adding 47 cents (5.7%) to 892 as the FRX steadily increased over the week to sit at 74.40 cents (a 1% rise). The market is at its highest point since early March in US$ terms. The market started off on a dearer note following on from the positive sentiment in last sale’s final session. Competitive tension was ramped up on the final day to see prices go higher as all fleece microns added 50 to 75 cents for the week. The market cleared 98.5% of the fleece on offer to have just 75 bales unsold. Skirtings also benefitted from the renewed competition as finer < 18.5 micron and low VM (< 1.5) types lifted by 80 to 100 cents with broader lots gaining 40 to 60 cents. Growers again were happy with the rising market as just 35 bales failed to sell - a 98% clearance rate. Cardings continued their recovery as < 17.5 micron LKS, STN and CRT lifted by 40 to 60 cents with broader types being quoted 20/40 dearer. The collapsing XB market was halted as gains ranged from 20 to 40 cents - a welcome lift after the month long battering they’ve taken. The 37 cent gain for 32 micron equated to a 15% rise!!

This week’s sale was the final opportunity for buyers to buy and, more importantly, ship wool before Christmas. This sense of urgency was evident from the outset and lasted through to the final lot knocked down in Fremantle. Topmakers and traders dominated the buying lists with indent buyers less active. Indents are usually volume based and the lack of normal buying % is indicative of some semblance of price sensitivity being reached. Trader may have met factories’ needs with price surety rather than indenting the next day. The promise of a Covid-19 vaccine has finally arrived with the first vaccinations administered in the UK this week. Russia has been vaccinating for a few weeks but without any medical approval that would stand up in the West. The FDA in the US is set to approve 2 more vaccines anytime now and vaccinations will commence there before Christmas. This will come as a great relief to planet Earth. As lockdowns and social distancing are wound back people will be able to resume work and re-engage with their shopping urge. This will be more than welcome by retailers who have been sweating on consumers getting back into shops and spending money again. What effect will this have on the demand for wool?? An increase hopefully and sooner rather than later. Many buyers have spoken about how much and when the button is pushed for an increase in demand that filters through to greasy wool prices making a comeback. Their opinion of price rises is hundreds of cents apart. Time will tell. Will wool be caught up in the current trade spat between China and Australia?? The advantage we have is that we grow 80% of the world’s merino wool with South Africa, Argentina and Uruguay supplying the rest. The other crucial commodity they need is Iron ore. It also has failed to be mentioned in regards to higher tariffs.

Next week sees the final sale of the year. The national catalogue climbs to 49,000 bales (the largest since early March), up by 10,000 on this week which was the biggest in 8 months. This bigger offering is a result of the lifting market this week and growers wanting to sell before the 3 week Christmas recess. Market might open on a cheaper note but may strengthen on the final day. A good result given the size of the offering and the trades angst to absorb a catalogue well over 40,000 bales.

        Southern Aurora Fwd Prices            

Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 4th December, 2020

 AWEX Northern Micron Indices Comparison

A VACCINE APPROVED!!

Once again the wool market followed a similar pattern of previous sales, volatile but on a much smaller scale. The market is looking for some defined direction but is unsure of which way to move. The big price swings that we saw in October and November have shrunk to minimal movements with the AWEX EMI down to single figure adjustments over the past 2 sales. The EMI lost 6 cents this week to finish at 1144 and, in US$ terms, the fall was identical to the gain of the previous sale (2 cents to 844). The FRX has risen over the course of the week to now sit above 74 cents. The market opened on a cheaper note but did firm up in the final session to have 19 micron fleece and broader in sellers’ favour with 17.5 to 19 5/10 cheaper and < 17 giving back some of last sale’s gains to fall 15 cents coming off the designated superfine sale, this buying strategy almost standard procedure. Skirtings sold to a similar pattern to the fleece but did finish the sale fully firm to 10 cents dearer. Cardings had a very solid sale with all types quoted as firm/unchanged except low VM (< 2%) LKS finer than 17.5 that were 30 to 40 cents higher. The crossbred sector continued to get cheaper as finer than 27 micron fell by 30 to 40 cents with the broader types unchanged. This sector of the market has fallen quite rapidly over the past 3 weeks with 26s making around 400 cents, 28s about low to mid 300s and a 30 micron fleece lot only mid 200s (based on 70% yield, < 2% VM). Crossbreds again made up the bulk of passed-in lots as the overall number was similar to last sale at 10%.

Buyers were reporting business enquiry and conversion to new orders was down a fraction on the week before thus the softer market on the opening day. It only took this slight price adjustment down to a level where exporters were more comfortable to be able to turn enquiry into sales. As a result most types were dearer and all buyers reported the final quotes that were sent to clients and mills were in fact higher than prices at the start of the sale but, with the averaging of individual lots not based on time period, the MPGs and indicators were not reflective of the closing levels. Purchases were evenly spread between processors, traders and indent operators.

As has been the case for several sales the anticipated national volume didn’t go close to what was finally offered. A look at the last 6 weeks of sales has an average of 12% of the initial offering withdrawn before sale. This, coupled with the passed-in rate that is averaging 15%, doesn’t leave a massive amount of wool that is actually sold to the trade.

The big news of the week has to be the emergency approval of a vaccine in the UK. The whole planet had been waiting for the past few months to see when and where the first approval would be. Vaccines will be rolled out as early as next week to the most critical in need, frontline medical workers and the elderly. This should be followed by the approval of 2/3 more vaccines before Christmas and vaccination programs to start in earnest early in the new year. This should have an immediate positive effect on the global economy as lockdowns and restrictions are wound back and people can go back to some form of normality pre Covid. As we can see in Australia the economy rebounded by a record level in the September quarter compared to the horror June quarter and the price of airline tickets and accommodation has trebled in the past 2 weeks as state lockdowns were eased. Hopefully this good news will see a genuine lift in global consumer spending in the new year on all goods including woolen clothing and products. According to all the good judges on the showfloor the market should be stable next week.

        Southern Aurora Fwd Prices            

Main Buyers (This Week)