Weekly Market Reports


24 April 2020

Friday, April 24, 2020

 WEEKLY MARKET REPORT 

Week Ending 24th April, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S43/19

This Week

M43/19

Last Sale

S42/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1749n

1734

1748

+1

2483

-734

18

1593

1568

1593

0

2404

-811

19

1483

1486

1513

-30

2291

-808

20

1443

1468

1493

-50

2264n

-821

21 1438n 1459 1477 (M) -18 (M) 2238 (M) -779 (M)
26 - 865n 899n (M) -34 (M) 1501n (M) -636 (M)

28

674n

673

703n

-29

1244

-570

30

-

484

483 (M)

+1 (M)

976 (M)

-492 (M)

MC

865n

861n

886n

-21

1084

-219

NO REAL CHANGE!

The national offering increased to 25,000 bales this week but price improvements looked even further away as the AWEX EMI gave up another 20 cents to 1272. The fall was similar in US$ terms (26 cents to 802) as the FRX ascended by 1 cent to 63 cents. Broader Merino fleece wools, some Crossbreds and cardings were the main instigators for the fall in the EMI. Fine fleece types < 18.5 finished either side of firm while 19 and broader retreated by 30 to 50 cents, more for the poorer style lots. Skirtings had a solid sale while crossbreds finer than 28 micron lost 15 to 35 cents with broader types unchanged and cardings fell by 10/20 cents.

The smaller weekly offerings that will only average 25,000 to 30,000 bales for the foreseeable future are unlikely to help the market in the short term. Sydney’s total of 4696 bales this week was the smallest weekly offering for 23 years.  The yearly offering is 11% lower (153,000 bales) than last season. The fall in the market year on year has been spectacular. The EMI is 671 cents lower than this week 12 months ago (1943 to 1272), a 34% fall. As the table above shows all fleece microns are 750 to 800 cents behind last year’s levels. The comparison is worse in US$ terms, 1398 to 802, a 595 cent reduction or 42%. The FRX is 12% behind, 63 cents to 72.

Demand is the key to every commodity and, as we’ve seen in the news this week, oil producers were paying refineries to take their oil as storage capacity overflowed while prices fell into negative territory for the first time ever as production outstripped demand by 2 to 1, global airline travel is almost nonexistent and peak hour traffic in every major city is a thing of the past as travel restrictions mean very little fuel is being used (the only exception is on farm) despite prices at the bowser now at 20 year lows. Wool exports of raw wool was 10% lower from the 5 major exporting countries (NZ, SA, Australia, Uruguay and Argentina) this season to February, this due to the ongoing drought here in Australia, demand falling from August and the start of restrictions due to Covid-19. The figures for March/April will be worse.  Looking at the countries that process wool, China imported 11% less than the same period to February; Italy was 19% lower; and the Czech Republic 16% back; but India had a 5% improvement. These figures are guaranteed to get worse as March/April retail numbers come in because retail spending (bar food and liquor) keep falling globally.

Next week has a similar volume on offer but no magic bullet in sight. Despite the rapid decline of the market lately 21s are still trading at 83% of their value since 1995 - just 17% of that time spent over 1500 cents in 2011,2015 and most of the recent period since 2017.

         Southern Aurora Fwd Prices            

Micron

Date

Low

21

June 20

1430

Main Buyers (This Week)

1

Techwool

3035

2

Tianyu Wool

2052

3

United Wool

1987

4

Aust. Merino

1982

5

Endeavour Wool

1569

6

PJ Morris

1265

Eastern Market Indicators (AUD cents/kg clean)

1272 cents ê 20 cents compared with 17/04/2020

Northern Market Indicators (AUD cents/kg clean)

1307 cents ê 18 cents compared with 17/04/2020

AUD/USD Currency Exchange

0.6308 é 0.0101 compared with 17/04/2020

17 April 2020

Friday, April 17, 2020

WEEKLY MARKET REPORT 

Week Ending 17th April, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S42/19

This Week

M42/19

Last Sale

S41/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1748

1768

1757

-9

2483

-735

18

1593

1601

1595

-2

2404

-811

19

1513

1519

1524

-11

2291

-778

20

1493

1481

1496

-3

2264n

-771

21 1488n 1477 1493n -5 2238 (M) -761 (M)
26 899n 899n 901n -2 1450n -551

28

703n

686

711n

-8

1244

-541

30

-

483

529 (M)

-46 (M)

976 (M)

-493 (M)

MC

886n

872n

891n

-5

1084

-198


THE SALE WE HAD TO HAVE??

This week’s sale that was originally rostered as a recess drew for a national catalogue of 21,000 bales but, after withdrawals, 18,000 were offered. The market barely moved as the AWEX EMI lost just 9 cents to fall below 1300 cents to 1292. As the A$ ascended by almost 3 cents (4%) to +64 cents, the market in US$ terms added 31 cents to its value to 828. Fleece movements were minimal as losses in Sydney were up to 10 cents while Melbourne’s market was in the positive by up to 15 cents, bar 20 micron and broader. Skirtings lost about 10 cents while cardings were either side of firm. Crossbreds were the biggest loser of any sector - 10 cents cheaper in Sydney but Melbourne’s 20 to 50 cent falls were the contributing factor to the EMI’s overall fall.

Was this week’s sale a success? Did we need to hold it?? Debate will rage for some time but next week’s volume is now 31,000 bales instead of the 45/50,000 that would have been offered if this week was kept as a recess. Most exporters warmed to the sale and the more manageable weekly volumes that are on offer for the next month which average about 30,000 bales, not too much in this volatile environment. Apart from the unscheduled sale that was held there were 3 on-line auctions trialed. AuctionsPlus held a sale yesterday with 4 brokers offering wool with 10 buyers bidding. WoolQ also held a sale this morning in which we and 3 other brokers participated with a similar number of exporters bidding. Another auction was held using Zoom on Wednesday morning. All three systems are in the very early stages of development and will need some refining of course but were met with enthusiasm from all parties and going forward will be fine tuned to complement the open-cry auction.

The IMF released new forecasts for global economic growth for 2020/21 (like darts at a dartboard). Economic growth is predicted to fall by 3% globally before recovering by 5.8% in 2021 as most developed country’s unemployment rates go to 10/15%. China’s economy could still actually grow this year by 1.2% and by 9.2% in 2021 but Italy’s economy could shrink by 9%. Even with the anticipated rebound next year all advanced economies will be smaller than 2019. China’s retail clothing sales for January/February were back by 33% compared to the same period last year and, in the US, March clothing sales were down by 50% compared to February - massive falls. This downturn, which will worsen, is being seen in retail orders to garment and fabric suppliers with unconfirmed reports of mass cancellations of orders by retailers with some big operators refusing to accept shipments. This is very bad news as consumer demand collapses for not only woolen clothing but whitegoods, electronics and a plethora of non-essential discretionary goods.

         Southern Aurora Fwd Prices            

Micron

Date

Low

21

June 20

1430

Main Buyers (This Week)

1

Endeavour Wool

1970

2

Lempriere

1664

3

Tianyu Wool

1613

4

Aust. Merino

1099

5

Seatech Ind.

938

6

Kathaytex

847

Eastern Market Indicators (AUD cents/kg clean)

1292 cents ê 9 cents compared with 10/04/2020

Northern Market Indicators (AUD cents/kg clean)

1325 cents ê 8 cents compared with 10/04/2020

AUD/USD Currency Exchange

0.6409 é 0.0281 compared with 10/04/2020

10 January 2020

Thursday, April 09, 2020

 WEEKLY MARKET REPORT 

Week Ending 10th April, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S41/19

This Week

M41/19

Last Sale

S40/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1757

1760

1743

+14

2497

-740

18

1595

1585

1578

+17

2410

-615

19

1524

1512

1508

+16

2293

-769

20

1496

1486

1463

+33

2272

-776

21 1493n 1486 1458n +35 2264n -771
26 901n 928 951 (M) -23 (M) 1460n (M) -532 (M)

28

711n

705

703n

+8

1205n

-494

30

-

529

541 (M)

-12 (M)

998 (M)

-469 (M)

MC

891n

902n

899n

-8

1096

-205

MARKET STEADIES!

After last week’s disaster anything less than a solid market would’ve been met with tears. Fortunately the market did the right thing and recovered a minute amount of the previous series’ losses - the EMI up by 14 cents to 1301. All merino fleeces lifted by 10 to 35 cents. Skirtings moved ahead by 30 to 50 cents while cardings were unable to ascend in price giving up 10 to 20 cents across the board. Crossbreds had a mixed sale as < 28s were either side of firm while broader types lost 25/30 cents.

The large anticipated offering of 44,000 bales didn’t eventuate as mass withdrawals (22%) saw just 29,500 bales offered nationally. As global demand (especially in Europe & North America) collapses with import bans now in place in India and Europe we are virtually left with one market, China. Buyers are reporting that any weekly offering over 35,000 bales is too much both in volume and financially for China to handle on their own with quantity below this level being absorbed as this week’s sale proved. To help cap the volume of wool to be offered NASC (National Auction Selling Committee) has approved the proposal to limit the number of lots in each selling room to 1000/day in each centre sending a clear message that we will try to offer the volume that can be bought without too much angst.

There have been many varied opinions, from growers through to retailers, as to how the wool trade tackles the problems that Covid-19 has and will continue to cause our industry well into this year and beyond. It’s a given that the world will fall into recession and some economists even predicting a depression. Arguments for and against sales continuing, the July recess brought forward or shortened from its current form to 1 or 2 weeks have been the hot topics of discussion this week. Wool Industries Australia members met this morning and reaffirmed their support of free enterprise principles to allow the continuation of the exchange of ownership of wool in these difficult times. Sellers should be able to sell their wool to the highest bidder if they choose to sell and buyers also given that same right to buy wool or not to buy judged on their situation of finance and ability to sell wool down the pipeline through to the retailer. There is no support to cancel or suspend wool sales as New Zealand and South Africa have done.

Next week, which was originally a recess, has been added to the selling program with 21,000 bales on offer, this to avoid a backlog of wool should open-cry auctions be postponed due to Covid-19.

         Southern Aurora Fwd Prices            

Micron

Date

Low

21

June 20

1440

Main Buyers (This Week)

1

Techwool

3870

2

Endeavour Wool

2716

3

Fox & Lillie

2415

4

Lempriere

2279

5

Tianyu Wool

2260

6

PJ Morris

1816

Eastern Market Indicators (AUD cents/kg clean)

1301 cents é 14 cents compared with 03/04/2020

Northern Market Indicators (AUD cents/kg clean)

1333 cents é 13 cents compared with 03/04/2020

AUD/USD Currency Exchange

0.6128 ê 0.0001 compared with 03/04/2020

3 April 2020

Friday, April 03, 2020

WEEKLY MARKET REPORT 

Week Ending 27th March, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S40/19

This Week

M40/19

Last Sale

S39/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1743

1706

1883

-140

2512

-769

18

1578

1560

1754

-176

2422

-844

19

1508

1491

1665

-157

2299

-791

20

1463

1471

1632

-169

2277

-814

21 1458n 1465 1609n -151 2268n -810
26 - 951 1081 (M) -130 (M) 1458n (M) -507 (M)

28

703n

731

871n

-168

1205n

-502

30

-

541

680n (M)

-139 (M)

963n (M)

-422 (M)

MC

899n

869n

987n

-88

1101

-202


HOW FAR DO WE LET THIS GO?

We thought we had seen it all over the years, stockpiles, droughts and the like but nothing really compares to, or conditions us to the marketing environment we are presently faced with. All players in our industry, from growers through to retailers, are in a bind and trying to choose between a raft of poor options in front of us.

Firstly, to deal with our own situation, on Monday I called a staff meeting to put a hold on all non essential travel for staff. This means that, unfortunately, we won’t be making shed visits or sending extra staff with clients to wool sales. The woolstore is operating at present as normal with transport so far unaffected and we are still testing wool for sale whilst they continue. Some staff have been asked to take leave and stay at home and some staff have been asked to work from home where possible but our office and store are manned and functioning well. Ian Sharp, who is based in Sydney, is collaborating with other brokers in our group who are also only sending one person to the sale.

The real question that is spinning round the industry is how long should we keep selling for, or how long we will be able to continue selling? There is real pressure mounting, particularly from European processors to call a halt as, whilst we sell into a downward spiral, it continues to erode their inventory positions but they cannot purchase whilst their borders and factories are closed. The same is the case for wool destined for India with Australian buyers sitting on quantities of purchased wool that they can’t ship. There is real fear that, in some cases, contracts will be reneged or renegotiated which will cause severe financial loss to some traders.

Whether we continue to sell or not, in the short term there is no doubt that the wool market is in for a tough trot like many commodities. We don’t know where the bottom is and can’t honestly advise growers whether they should sell now or wait. For those who choose to wait, it could be months before we see an upturn. My view is that we need to continue selling in some form. I’m not convinced that the public auction right now is the best way to do it. There are various private selling options and electronic sale methods currently being trialled. The EMI lost 155 cents this week or nearly 11%. We don’t need too many weeks like that but the major brokers have stated they will continue to sell regardless and allow growers the choice to sell or not and, as we saw last week, those that did decide to sell (which was only about half of the offering) still bore the brunt of a market with no confidence. Would a one, two or three week recess help? I think a brief recess is needed to judge better the global situation and allow traders time to catch up with their finances which are stretched to the limit.

Next week there will be 44,400 bales to be offered and growers need to think carefully about their selling instructions and consult well with their broker. Please keep safe and well, and we look forward to catching up in person when this has past.

         Southern Aurora Fwd Prices            

Micron

Date

Low

21

June 20

1400

Main Buyers (This Week)

1

Tianyu Wool

2607

2

Techwool

2475

3

Aust. Merino

2225

4

Kathaytex

1708

5

United Wool

1618

6

Endeavour Wool

1601


Eastern Market Indicators (AUD cents/kg clean)

1287 cents ê 155 cents compared with 27/03/2020


Northern Market Indicators (AUD cents/kg clean)

1320 cents ê 162 cents compared with 27/03/2020

   

AUD/USD Currency Exchange

0.6129 é 0.0209 compared with 27/03/2020