Weekly Market Reports


28 February 2020

Friday, February 28, 2020

 

 WEEKLY MARKET REPORT 

Week Ending 28th February, 2020

 AWEX Northern Micron Indices Comparison


 AWEX INDEX

This Week

S35/19

This Week

M35/19

Last Sale

S34/19

Sydney Change

Last Year

Sydney

17

18

19   

20 

21 

26 

28 

30 

MC 

CYBER ATTACK CANCELS WOOL SALE

All indications were pointing to a dearer market this week but things ground to a halt as a cyber attack on the wool trades software provider, Talman, on Monday night rendered all participants idle. Both sides of the wool trade (brokers and buyers) both here and in New Zealand use Talman for their day-to-day work programs but from Tuesday morning no-one could do anything from lotting and preparing clips for testing, ordering wool out to be shipped to running the wool sales. After a series of meetings Sydney was to delay its wool sale on Wednesday till 2.00pm. When that became unfeasible all lots were to be sold on Thursday with the other 2 centres to sell Thursday/Friday. By Thursday morning with no solution in sight the decision was taken to delay this week’s sales till next week. South Africa held their  wool sale this week with the market rising which augurs well for next week’s sale.

This now leaves us with the situation of holding 2 weeks of sales in the one series, a total of 69,000 bales, the largest national weekly offering for many years. Buyers are reporting that this big quantity will be absorbed as China is still very keen to secure wool and keep mills running and meet forward commitments despite the ongoing problems with the Coronavirus. A worrying sign is emerging from Italy as the lockdown of 3 towns near Biella and Milan could see a halt to wool processing there with some Superfine orders cancelled already.

                                                       Southern Aurora Fwd Prices              

Micron

Date

Low

21

March 20

1790



Main Buyers (This Week)

1

Techwool

2

Tianyu Wool

3

Fox & Lillie

4

PJ Morris

5

Modiano

6

Seatech



Eastern Market Indicators (AUD cents/kg clean)

cents é cents compared with

Northern Market Indicators (AUD cents/kg clean)

cents é cents compared with


       AUD/USD Currency Exchange

0.0000 é 0.0000 compared with

21 February 2020

Friday, February 21, 2020

WEEKLY MARKET REPORT

Week Ending 21st February, 2020

AWEX Northern Micron Indices Comparison


AWEX INDEX

This Week

S34/19

This Week

M34/19

Last Sale

S33/19

Sydney Change

Last Year

Sydney

Sydney Yearly

Change

17

2082

2078

2063n

+19

2620

-538

18

1945

1963

1928

+17

2533

-588

19

1839

1848

1833

+6

2422

-583

20

1813

1796

1803

+10

2390

-577

21

1798n

1779

1773(M)

+6(M)

2344(M)

-565(M)

26

1151n

1145n

1121n

+30

1414n

-263

28

894n

881

866(M)

+15(M)

1145(M)

-264(M)

30

-

675

678(M)

-3(M)

983(M)

-308(M)

MC

1105n

1125n

1108n

-3

1215

-110


BUSINESS AS USUAL


The market’s ability to show stern resistance in the wake of the Coronavirus was on show this week as most microns recorded double-digit gains with the sub 18.5s regaining their previous series’ losses. The AWEX EMI rose by 13 cents to 1581 but lost 3 cents in US$ terms to 1052. This due to the A$ falling to 66.5 cents, the lowest point for some time. The rises for merino fleece microns ranged from 5 to 25 cents with wild fluctuations between the better style wools (40 to 100 cents higher than their indicators) with favourable AM results .The poorer style, low yielding tender types price gap was up to 200 cents. Skirtings had a good sale as the low VM (3%), good style lots finer than 18.5 added 20 to 35 cents to their values while all others were fully firm. Broad LKS and STN lost up to 15 cents as the MCI fell by just 3 cents to 1105. Finer XBs benefitted from good demand as 28s and finer jumped by 15 to 30 cents while the broader microns finished in buyers favour.


The wool industry in China is showing increasing signs of returning to some form of normality. As more and more workers are allowed back to their factories and offices mills are keen to play catch-up in processing the backlog of greasy wool. In some cases almost 4 weeks of non-production. Banks reopened “letters of credit” which granted the way for exports to be shipped and normal buying patterns look to be back in full swing. It was “business as usual” for the first time in over a month. The potential for shipping issues or financial stress didn’t appear this sale as a few participants were predicting. The big anticipated retraction in the market a month ago hasn’t happened. In fact over the past 4 sales the EMI has risen by 60 cents. Close monitoring of the shipping situation has exporters nervous as fewer container ships could lead to higher shipping charges and, without a B/L (bill of lading) the exporters TT payments cannot be made and may freeze up funds of some contracts indefinitely.


The National Council of Wool Selling Brokers of Australia (of which we are a member) held a centenary auction in Melbourne yesterday in the original Melbourne Wool Exchange building. There are 24 brokers across the country who are members of the NCWSBA and were invited to sell 17 lots each in this special sale (of which 12 participated) offering 1338 bales. Top price of 2250 cents came from the famed “Tarrangower” property in the New England. We sold wool from Orange, Brewarrina, Yeoval, Hillend, Jerangle via Cooma and Molong with 3 clients attending. Our top price was 1545 for an 18.5-75.9-0.5, 77mm-47nkt line of AAAAM a/c Bundi P’Ship from Hillend.


Southern Aurora Fwd Prices


Micron

Date

Low

21

March 20

1805



Main Buyers (this week)


1

Techwool

6059

2

Tianyu Wool

3910

3

Fox & Lillie

3000

4

PJ Morris

2732

5

Modiano

2553

6

Seatech

2073



Eastern Market Indicators (AUD cents/kg clean)

1581cents é13 cents compared with 14/02/2020

Northern Market Indicators (AUD cents/kg clean)

1618cents é 14 cents compared with 14/02/2020


AUD/USD Currency Exchange

0.6748 é 0.0030 compared with 14/02/2020

14 February 2020

Friday, February 14, 2020

WEEKLY MARKET REPORT 

Week Ending 14th February, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S33/19

This Week

M33/19

Last Sale

S32/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2063n

2048

2080

-17

2587

-524

18

1928

1947

1943

-15

2490

-562

19

1833

1830

1834

-1

2342

-509

20

1800

1779

1800

+3

2306

-503

21 - 1773 1793(M) -20(M) 2281n(M) -508(M)
26 1121n 1160n 1091n +30 1368n -247

28

-

866

821(M)

+45(M)

1103(M)

-237(M)

30

-

678n

663(M)

-15(M)

928(M)

-250(M)

MC

1108n

1128n

1118n

-10

1183

-75

MARKET JUST HANGS IN

As expected, Coronavirus and its impact in China are still dominating the news and the flow-on effects for the global economy. It’s a given that economic growth will slow around the world but by how much and for what length of time is impossible to pinpoint, anywhere from 0.5 to 1.5% less growth forecast. The general consensus is this will last for the next 2 quarters at least. The economic slowdown in China is already taking effect as travel restrictions and a slow return to work for most of the population, is massively impacting consumer spending from food to electronics and clothing. The only factories allowed to resume operations thus far are those producing commodities that prevent the contagion, about 10%. It’s hoped another 30% of factories will start work this Monday and most others on 24th February. In regards to wool, port logistics in China are saying there should only be a one week delay for wool to reach its final destination, but this could stretch out to 2/3 weeks depending on availability of containers going back to China. The Chinese government is making an all-out effort to quell the spread of the virus. The big cities have set up screening stations at their entry points and airports and railway stations, with factories not allowed to have any workers on site from quarantined provinces. Many workers if possible are working from home.

The market’s reaction was minimal this week as the AWEX EMI lost just 9 cents to 1568 and 11 cents to 1054 in US$ terms. Fine merino fleece microns <18.5 lost 15 to 40 cents due mainly to a style adjustment from the superfine selection offered in the previous series. 19s and broader were in sellers favour. Skirtings had a worse sale than their fleece counter-parts giving up 40 to 60 cents while all types in the carding sector bar LKS fell by 20 to 30 cents. Crossbreds were the only shining light as increases ranged from 15 to 35 cents.

Europe was again the dominant buyer as China deals with the Coronavirus and many mills still not back into full production. The large capital expenditure of the major buyers has surprisingly been maintained over the past 3 weeks. If shipments are significantly delayed, the cash reserves of buyers will be tested in the short term. Another problem will be sourcing containers to fill with wool on ships returning to China. The lack of ships and containers arriving from China has dramatically fallen over the past 3 weeks which means the quick turnaround for their imports and our exports back to China has gone as has the “backload discount” the shipping companies offered to ensure full containers on the return leg. This now could be a thing of the past as a shortage of container space could escalate shipping prices. Market direction next week is any-ones guess.

Southern Aurora Fwd Prices              

Micron

Date

Low

21

March 20

1800

Main Buyers (This Week)

1

Techwool

5630

2

Fox & Lillie

3658

3

Endeavour Wool

2871

4

Modiano

2831

5

Michell Wool

1682

6

United Wool

1397


Eastern Market Indicators (AUD cents/kg clean)

1568 cents  9 cents compared with 07/02/2020


Northern Market Indicators (AUD cents/kg clean)

1604 cents  8 cents compared with 07/02/2020

   

AUD/USD Currency Exchange

0.6723  0.0030 compared with 07/02/2020

7 February 2020

Friday, February 07, 2020

WEEKLY MARKET REPORT 

Week Ending 7th February, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S32/19

This Week

M32/19

Last Sale

S31/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2080

2078

2038

+42

2578

-498

18

1943

1922

1893

+50

2483

-540

19

1834

1825

1795

+39

2317

-474

20

1800

1796

1753

+47

2290

-490

21 1789n 1793 1731n +58 2260n -471
26 1091n 1104n 1081n +10 1353n -262

28

819n

821

803n

+16

1045n

-226

30

-

663

649 (M)

+14 (M)

888 (M)

-225 (M)

MC

1118n

1157n

1114n

+4

1159

-41

BUYERS STARE DOWN CORONAVIRUS

The expected falls due to uncertainty over the Coronavirus issue this week didn’t materialise as buyers led by Chinese interests continued unabated. Despite what seems to be an escalating problem with the virus combined with the extension of the Chinese New Year to keep people at home, the start of sales on Wednesday’s market was on firm footings and gathered more momentum on the second day of sales.

There were several industry huddles late last week among trade bodies who discussed options from suspending sales to continuing as normal and maybe with some support from brokers to extend payment terms to allow cash strapped buyers to continue operating. The lockdown in China has meant that no-one is at work to process invoices hence buyers here in Australia are carrying the cost of delayed terms. With $43.35m sold this week it won’t take long to chew up available finance resources, so the extension of payment by even a week allows breathing space until things sort themselves out. Macwool was one of the first brokers to extend payment and free storage to 14 days, which was well received by buyers and, as the week progressed, a further six or seven brokers followed suit.

The positive tone was not universal however as the micron indices show above. Whilst the low vm, better style wools all showed healthy gains this wasn’t the case for the large quantity of low yielding, sub 50% fleece types which struggled to maintain values. There is about 23% of the catalogue not purchased by China but these low yielding, drought effected wools are certainly reliant on Chinese competition, hence our willingness to extend payment terms on behalf of growers to maintain their support.

We have advised buyers we will offer this extension for four selling weeks then review the situation.

In regards to the market, momentum built as the sale progressed to peak as the last lots were sold in each centre. The AWEX EMI added 29 cents to 1577 and 22 cents in US$ to 1065. All microns posted gains of 30 to 60 cents with the larger volume of superior style, finer types in this designated superfine sale in Sydney, where premiums were 150 to 200 cents higher but, as mentioned above, the lots yielding below 50% looked 200/250 cents off the pace. The situation was better for merino skirtings, < 17 micron jumped by 50 to 70 cents with all others 20/30 higher. Cardings were also positive finishing in sellers’ favour. Crossbreds also benefitted from the renewed competition to add up to 20 cents to their previous sale’s prices. Next week has 43,000 bales on offer. Hopefully the people we need to be back at work in China are allowed to work and some form of normality can be restored there. It’s been a crazy few weeks!!

Southern Aurora Fwd Prices              

Micron

Date

Low

21

March 20

1800

Main Buyers (This Week)

1

Techwool

4199

2

Tianyu Wool

3113

3

Modiano Aust.

2416

4

Endeavour Wool

1999

5

Fox & Lillie

1647

6

Michell Wool

1554


Eastern Market Indicators (AUD cents/kg clean)

1577 cents é 29 cents compared with 31/01/2020


Northern Market Indicators (AUD cents/kg clean)

1612 cents é 34 cents compared with 31/01/2020

   

AUD/USD Currency Exchange

0.6759 é 0.0014 compared with 31/01/2020