Weekly Market Reports


26 June 2020 - Updated

Friday, June 26, 2020

 WEEKLY MARKET REPORT 

Week Ending 26th June, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S52/19

This Week

M52/19

Last Sale

S51/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1592

1571

1613

-21

2120

-528-

18

1401

1392

1438

-37

2090

-689

19

1276

1273

1314

-38

2002

-732

20

1212

1219

1243n

-31

1984n

-772

21 1197n 1194 1229n -32 - -
 26 810n 795n 815 (M) -20 (M) -

28

-

551

589n (M)

-38 (M)

1060 (M)

-491 (M)

30

-

466n

508 (M)

-24 (M)

835n (M)

-369 (M)

MC

814n

853n

858n

-50

961

-147

A SEASON TO FORGET!!

Another poor week for the wool market as the final sale of the season brought more misery for wool growers to finish a season to forget for so many reasons. Our bleak prediction that the AWEX EMI could fall below 1100 cents almost came true as it finished the season at 1110 (a fall of 29 cents) saved only by a steadying market on the final day of selling. All merino fleece microns fell by 20 to 40 cents. Skirtings had a mixed sale as finer than 17.5 held their ground as the broader types retreated by another 40 to 60 cents. Cardings also continued their cheaper trend as all types in this sector fell by 40 to 90 cents and, to round out the disappointing week, crossbreds lost 30/40 cents.

The only few good things to report on over the past season has been the incredible prices that lambs, sheep and cattle have been making for some time now and autumn rains over a vast area breaking the back of the drought. As far as wool prices go it is a season to forget. A 605 cent reduction (1715 to 1110) is the sad tale of the tape - a 35.3% fall. In US$ terms the losses were identical in % terms a 35.8 fall from 1199 to771. The FRX however is virtually unchanged at 69 cents with a peak over 75 and a low point of 55 cents. With the falling market the pass-in rate climbed to 17% up from 11 last season. All this despite the national offering being reduced by 195,000 bales to 1.47 million, an 11% drop in volume primarily due to drought. No1 buyer was Techwool Trading securing 178,000 bales; next was the new buying entity having its first full year of trading was Endeavour Wool with 111,000 bales; and 3rd was Fox & Lillie who bought 104,000 bales. The top 10 buyers bought 72% of the offering.

This is certainly a season to forget. After a run of very high wool prices that started back in 2016 the end of the “super-cycle” started almost 2 years ago but did recover until Easter last year when the current run of falling prices we are in now began. The big fall in August last year from 1754 to 1365 certainly put paid to any price recovery back to the lofty heights the EMI enjoyed. The market did seem to find a base to trade between 1500 and 1650 from September to March when it started to fall to today’s level. The reasons are varied for the falling market, from prices getting to high, (every commodity has a point when price dictates over everything else) to drought affected wools to, of course, the devastating effects of Covid-19. When will economic growth lift?? The pandemic is still rampant in many countries and, with the fear of a 2nd wave, this could delay global economic recovery by another 6/12 months as most countries are still heading into recession, let alone on the road back so consumer spending on discretionary goods like clothing and electronics will be very slow.

The new season starts next week with 31,000 bales on offer in the 3 centres. If new business isn’t forthcoming, the market will struggle to hold where it is.

Southern Aurora Fwd Prices            

Micron

Date

Low

21

Aug/Sept 20

1170

Main Buyers (This Week)

1

Techwool

3017

2

Endeavour Wool

2930

3

Lempriere

2512

4

Tianyu Wool

1909

5

United Wool

1884

6

Aust. Merino

1670

Eastern Market Indicators (AUD cents/kg clean)

1110 cents ê 29 cents compared with 19/06/2020

Northern Market Indicators (AUD cents/kg clean)

1160 cents ê 25 cents compared with 19/06/2020

   AUD/USD Currency Exchange

0.6942 é 0.0072 compared with 19/06/2020

19 June 2020

Friday, June 19, 2020
News from Macdonald & Co Woolbrokers and Carmichael & Co Woolbrokers

 WEEKLY MARKET REPORT 

Week Ending 12th June, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S51/19

This Week

M51/19

Last Sale

S50/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1613

1588n

1624

-11

-

-

18

1438

1427

1473

-35

2238

-765

19

1314

1297

1360

-46

2144

-784

20

1243n

1224

1286

-43

2128n

-842

21 1229n 1223 1268n -39 2120 (M) -870 (M)
 26 - 815n 833 (M) -18 (M) -

28

-

589

613n (M)

-24 (M)

1093n

-469

30

-

490n

508 (M)

-18 (M)

914n (M)

-406 (M)

MC

858n

903n

874n

-16

997

-123

NEW ENTITY BROADENS OUR BASE

Next week marks a new chapter for our wool brokerage business. We are launching a new trading entity, Carmichael & Co Woolbrokers, to be operated by a team of former TWG Wool employees which has been wound up after 115 years of trading by its Canadian parent company Nutrien. Established in 1905 by Thomas Green, in Cooma, the company has traded for decades offering woolgrowers a personalised independent service built on the same philosophies that we have also operated on.

Manager Jason Carmichael who is a direct descendant of Thomas Green will auction the first catalogue for Carmichael & Co Woolbrokers next Tuesday. The business when founded operated in Cooma, Crookwell and Guyra, all in excess of 3000 feet above sea level which was the theory to drought-proof the business given this was around the time of the infamous Federation drought so the attraction to us was along similar lines and, although the Monaro is still in drought, we believe the strategy is a good one. Depots for Carmichael & Co are now operating in Cooma, Crookwell, Guyra, Cootamundra and Wellington with wool being stored and cored at our Dubbo woolstore and under contract principally in Cooma, Yass, Bathurst and Goulburn. Tamworth, Wagga and Yarrawonga will also see small quantities.

So it’s a great welcome from us at MacWool to the staff and clients of Carmichael & Co.

Onto the market. The softer tone late last week sadly continued in this series. With just the 2 eastern seaboard centres operating only 15,800 bales were offered, 425 more than the smallest sale of 2 weeks ago for 25 years. As is sometimes the case, tiny offerings don’t always mean a dearer market as the most recent orders and prompt shipment needs had been filled the trade was almost completely reliant on new business being written. This was not forthcoming and the market suffered. The AWEX EMI fell by 32 cents to 1139 (its lowest point for 5 years) as < 17.5 micron lost 10/25 cents while broader microns bore the brunt of the downward trend giving up 35 to 50 cents. The lower yielding wools were the driving force in the cheaper market with exporters still struggling to average these lots into their purchases. The ever-increasing volume of higher yielding types was least affected but there is still not enough of these coming through to blend successfully with the lower yielding types. Skirtings also suffered losses similar to their fleece counterparts, 40 to 60 cents back. Cardings had a mixed sale as finer types < 17.5 micron look 5/10 cents dearer while broader lots gave up 15 to 25 cents with crossbreds finishing 20 cents down.

All 3 centres are in action for the final sale of the season with 30,240 bales catalogued, the biggest sale since early April. If there is not a sprinkling of business done early next week we could see the EMI fall below 1100 cents.

 Southern Aurora Fwd Prices            

Micron

Date

Low

21

July 20

1220

Main Buyers (This Week)

1

Lempriere

1710

2

Tianyu Wool

1678

3

United Wool

1677

4

Endeavour Wool

1416

5

Techwool

1415

6

Aust. Merino

851

Eastern Market Indicators (AUD cents/kg clean)

1139 cents ê 32 cents compared with 12/06/2020

Northern Market Indicators (AUD cents/kg clean)

1185 cents ê 33 cents compared with 12/06/2020

   AUD/USD Currency Exchange

0.6870 ê 0.0075 compared with 12/06/2020

12 June 2020

Friday, June 12, 2020

 WEEKLY MARKET REPORT 

Week Ending 12th June, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S50/19

This Week

M50/19

Last Sale

S49/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1624

1604

1659

-35

-

-

18

1473

1483

1504

-31

2238

-765

19

1360

1368

1389

-29

2144

-784

20

1286

1280

1318

-32

2128n

-842

21 1268n 1250 1298n -30 2120 (M) -870 (M)
 26 820n 833n 823 (M) +10 (M) -

28

624n

613

615n

+9

1093n

-469

30

-

508

500n (M)

+8 (M)

914n (M)

-406 (M)

MC

874n

896n

884n

-10

997

-123

MARKET STUMBLES, TOO MUCH WOOL??

The market started this series on a solid footing which pointed to a 3rd week of rises but, unfortunately, this was not to be as losses in the final session saw the AWEX EMI retreat after a fortnight of positive movements. The EMI fell by 12 cents to 1171 and 8 cents to 813 in US$ terms as the FRX finished the week where it started, 69.50 after peaking at 70 cents earlier in the week. The falls were uniform across all microns - 30 to 35 cents with only the better style types less affected. Skirtings had a quiet sale to be quoted as firm/unchanged while cardings couldn’t continue their rising trend as the MCI lost 10 cents as high VM CRT/STN gave up 20 cents while fine LKS gained 15/20 cents. Crossbreds were solid for < 28 micron as broader types added 10 to 15 cents.

The short-term orders that saw the market stabilise over the past month look to have been filled for the time being. A contributing factor for the reversal in this series was the high number of fleece types that were unable to average the required 70% washing yield for many Chinese orders. Most mills are still very cautious to place new orders and these are for small quantities. There is, however, a better take-up of old existing orders down the pipeline but not in the volume needed to call this a full-blown recovery as early stage processors are still reporting cash flow problems. Short wool types for open top, knitted and semi-worsted processing look to be quicker to recover than the traditional worsted sector. Scoured and carbonised carding wools are also in increasing demand as the local Chinese market shows signs of a lift in consumer spending as more retailers open their doors and entice customers back in. Current prices are attractive right down the pipeline to the retailer but their main focus is to reopen and try to clear old stock at minimal losses before placing new orders for the Northern hemisphere autumn/winter season. The pipeline from greasy wool sold to Chinese retailers can be quick when the demand kicks in.

Showfloor chatter from the buyers seems to be concerned about volumes in the new season exceeding demand. Normally there is some wool that is held back from sale till the new financial year ticks over. We can’t see this happening (certainly not with us). In fact, many growers have had the need to sell wool/stock to finance their farming operations because of the Autumn break. For those holding wool the question is when to sell? Has the market bottomed out and how long will the wait be before prices get back to acceptable levels? The OECD forecasts 2 years before global economic activity returns to a level pre Covid-19 (final 6 months of 2019) with or without a 2nd wave of infection we could be in for a long road back. Just the 2 east coast centres selling next week with only 16,800 bales on offer. Hopefully a small enough quantity to stop the market’s slide.

 Southern Aurora Fwd Prices            

Micron

Date

Low

21

July 20

1220

Main Buyers (This Week)

1

Endeavour Wool

2361

2

Techwool

2213

3

United Wool

2142

4

Lempriere

1631

5

Tianyu Wool

1253

6

Aust. Merino

1218

Eastern Market Indicators (AUD cents/kg clean)

1171 cents é 12 cents compared with 05/06/2020

Northern Market Indicators (AUD cents/kg clean)

1218 cents é 14 cents compared with 05/06/2020

   AUD/USD Currency Exchange

0.6945 é 0.0004 compared with 05/06/2020

5 June 2020

Friday, June 05, 2020

 WEEKLY MARKET REPORT 

Week Ending 5th June, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S49/19

This Week

M49/19

Last Sale

S48/19

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1659

1622n

1653

+6

-

-

18

1504

1493

1498

+6

2318

-814

19

1389

1386

1363

+26

2193

-804

20

1318

1312

1296

+22

2179

-861

21 1298n 1299n 1275n +23 2174n -876
 26  - 823n  801n (M) +22 (M) 1448n (M) -625 (M) 

28

615n

608

600n

+15

1115n

-700

30

-

500n

459 (M)

+41 (M)

939n (M)

-439 (M)

MC

884n

879n

843n

+41

1021

-137

CAN THE MARKET RISE 3 WEEKS IN A ROW??

With just the 2 eastern seaboard centres selling this series’ supply, or lack of, was always odds-on to come out in front. The national weekly offering of 15,300 bales was the smallest in 25 years as the market followed conventional economic theory of reduced supply attracting stronger demand. With supply so light only a few extra orders in the market had demand increasing to have the AWEX EMI add 13 cents to 1183. Even more impressive was the rise in US$ terms (up by 44 cents to 821) a consequence of the FRX appreciating in favour of the A$ by 3 cents (4.5%) - a massive shift. Fine fleece indicators < 18 micron were marginally dearer (5 to 10) while 18.5s to 22s added 15 to 30 cents. Skirtings outdid their fleece counterparts climbing by 25 to 45 cents with only 24 bales passed-in as extra knitwear orders were placed. Carding continued their price recovery as all types in this sector were quoted 20 to 40 cents higher to have the MCI gain 41 cents to 884, an 89 cent (11%) rise over the past 3 weeks having reached a low point that was too hard to ignore a month ago. Crossbreds also benefitted from the renewed demand to rise 10 to 30 cents.

One thing that is noticeable is the slight improvement in yields of fleece wools. The recent rain has certainly washed some dust out and the resulting ground cover has less dust being kicked up from sheep moving through paddocks. Buyers are certainly looking forward to being able to buy higher yielding wools but will also have to contend with a higher VM %  and are still having difficulty placing types with high mid-breaks and low tensile strength - these should decrease as we move through winter.

Three weeks of rises from the past 5 sales would suggest a recovery is on the way?? No-one is prepared to go out on that limb and declare the worst is behind us. Tight supply has certainly been the main reason for the market’s steady tracking recently and, as this series showed, even as the FRX shot up to a 4-month high, it couldn’t dampen buyers’ renewed demand. Global economic conditions have not changed but, as travel and social-distancing restrictions ease and people return to full-time work, then will we see a lift in consumer spending and demand for discretionary goods as money becomes more readily available to spend on non-essentials. How long could this take?? Given the March quarter recorded a negative growth figure in every developed economy (Australia was -0.3%) and the June quarter will be worse, we are still going into a recession and not beginning to come out of it so global economic recovery may not even start till late this year/early 2021. The European Commission is providing a $750 billion recovery fund of which $500 billion is in the form of grants to help economies get back on their feet and consumers to resume work and spend again.

Fremantle joins the fray again next week as the national catalogue rises to 24,000 bales. Hopefully not enough to dampen demand given the sharp rise in the FRX.

 Southern Aurora Fwd Prices            

Micron

Date

Low

21

July 20

1270

Main Buyers (This Week)

1

Endeavour Wool

2133

2

Techwool

1922

3

Aust. Merino

1596

4

Fox & Lillie

1240

5

United Wool

1014

6

Kathaytex Aust.

988

Eastern Market Indicators (AUD cents/kg clean)

1183 cents é 13 cents compared with 29/05/2020

Northern Market Indicators (AUD cents/kg clean)

1232 cents é 20 cents compared with 29/05/2020

AUD/USD Currency Exchange

0.6941 é 0.0300 compared with 2/05/2020