Weekly Market Reports


28 August 2020

Friday, August 28, 2020

 WEEKLY MARKET REPORT

Week Ending 28th August 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S09/20

This Week

M09/20

Last Sale

S08/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1448n

1438 1445 +3 1845 -397

18

1249

1228

1239

+10

1795

-546

19

1085

1062

1076

+9

1593

-508

20

991

979

1025

-34

1515

-524

21 976n 952 1016n -40 1499n -523
 26 645n 700 680n -35 1133n (M) -433 (M)

28

-

436

465n

-34 (M)

846 (M)

-410 (M)

30

-

368

428 (M)

-60 (M)

698n (M)

-330 (M)

MC

663n

624n

621n

+42

806n

-143

SMALL QUANTITY – SMALLER DEMAND!

The sorry state of the wool market was no more evident than this week as the market slipped further with only the 2 eastern seaboard centres in action. As we predicted the reduced weekly volume of just 20,500 bales - the smallest this season and the least offered since mid June - couldn’t sustain the market. The AWEX EMI lost another 16 cents to 926 with the fall identical in US$ terms (16 cents to 668). A reduction in the FRX by half a cent to 71.90 and the designated superfine sale in Sydney were not enough to keep the market from falling. With the finer superior style offering in Sydney, < 19 micron did show an ounce of resilience with the indicators up to 10 cents dearer with the odd lot attracting a premium up to 60 cents but 19s and broader dragged the overall market into the red as they fell by 10/55 cents. The story was similar for merino skirtings as the better style types were either side of firm while the broader/burrier types gave up another 20 to 30 cents. The carding sector bucked the downward trend of all other sectors and rebounded after 3 series of heavy losses (180 cents). LKS led the price recovery with gains of 40 to 70 cents while CRT/STN added 20 to 30 cents, a welcome rise after the recent battering they took. Crossbreds also contributed to the EMIs fall as all microns from 25 to 32 gave up another 20 to 60 cents. With some sectors of the market maintaining a ‘status quo’ or increasing in price the pass-in rate dropped sharply, to just 11%.

Chinese top-makers dominated buying lists with local trading exporters making some sort of impression across most types with the superior selection encouraging some interest from Italian mills on the very best types on offer. The bread and butter fleece wools from 19 to 22 micron (which was the easily traded and most used type) are struggling to capture any demand and continue to be out of favour with most processors. This is reflective of how current volume is unable to be moved swiftly through the supply chain.

The National Sheep Show and Ram Sale was held in Dubbo this week but under a Covid-19 affected format. Less studs were on show (34) and no commercial sheep on display or to be judged. There was no Supreme ram judged due to national travel restrictions not allowing any interstate champions to be on site to go up against the NSW champion. The auction was interfaced with Auctions Plus with 47 rams up for sale. Top price went to local stud, Roseville Park, with a sale topping price of $31,000 bought by Chris Bowman on behalf of a syndicate of 4 Australian and 1 NZ stud. Their draft of 8 rams averaged $9185. Other results included: Langdene, Dunedoo - 4 rams sold for a top of $10,000 to average $6125; Nerstane, Woolbrook - 1 ram sold for $6,000; West Plains Poll from Delegate sold 1 ram for $10,000; Adina, Cooma topped at $5,000 to average $3,500; Darriwell, Trundle sold 2 rams to average $6750 for a top of $10,000; and Coddington, Uardry achieved a top price of $3,500 to average $3,250. The 32 rams sold for an average $6155. Next week has all 3 centres in action with a catalogue of 33,000 bales. If more business isn’t forth-coming the market will struggle to stay above 900 cents.

Southern Aurora Fwd Prices            

Micron

Date

Low

21

Oct/Nov 20

925

Main Buyers (This Week)

1

Endeavour Wool

2584

2

Techwool

1794

3

United Wool

1758

4

Tianyu Wool

1714

5

Fox & Lillie

1399

6

Kathaytex

1024

Eastern Market Indicators (AUD cents/kg clean)

929 cents ê 16 cents compared with 21/08/2020

Northern Market Indicators (AUD cents/kg clean)

982 cents ê 9 cents compared with 21/08/2020

   AUD/USD Currency Exchange

0.7193 ê 0.0052 compared with 21/08/2020

21 August 2020

Friday, August 21, 2020

 WEEKLY MARKET REPORT

Week Ending 21st August 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S08/20

This Week

M08/20

Last Sale

S07/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1445

1415

1499

-54

1952

-507

18

1239

1221

1284

-45

1888

-649

19

1076

1090

1143

-67

1728

-656

20

1025

1020

1100

-75

1683

-658

21 1016n 998 1086n -70 1667n -651
 26 680n 731 788 (M) -57 (M) 1148n (M) -417 (M)

28

465n

470

523n

-58

870n

-405

30

-

428

454 (M)

-26 (M)

701 (M)

-273 (M)

MC

621n

618n

651n

-30

895n

-274

DEMAND FALLS - MARKET SLIPS UNDER 1,000cents!

Last series’ small glimmer of hope that the consolidation of merino fleece prices may have finally signaled an end to falling prices and the AWEX EMI staying above 1000 cents was not to be. Another sharp correction across all sectors this week dashed any hope that the market could sustain prices above the 1000 cent “psychological” level at which many in the industry had probably hoped more than predicted  that the market would not fall under. The EMI lost 59 cents to 945, a 6% fall, now its lowest level since October, 2012. The fall was 30 cents in US$ terms to just 685 as the FRX ascended to 72.50 cents, up 1.25 cents for the week and its highest point since February 2019.

From the opening lot prices softened on all types in all sectors. Merino fleeces fell by another 30 to 75 cents with very little premium for NM lots or FNF types. Skirtings also suffered big losses as 17s and broader (regardless of VM) fell by 20 to 80 cents with superfine types < 3% VM just into buyers’ favour. After their big fall last week cardings also were cheaper but didn’t suffer losses like the previous series. All types in this sector fell by 20 to 35 cents. Crossbreds were the sector to suffer the biggest hit. 27 micron and finer collapsed by 80 to 140 cents while all other microns gave up 30 to 70 cents. 42% of the crossbred offering was passed-in in Sydney. Once again large European top-maker, Modiano, was the dominant buyer for this sector snapping up 27%, perhaps the only exporter to see value in these low price wools.

The market’s large fall saw pass-in rates soar to 26%, up from just 8% the previous sale, to see just 24,600 bales sold to the trade from the 33,100 offered but even this small quantity couldn’t be met with enough demand. The almost 2% upward shift in the A$ didn’t help but was by no means the sole contributing factor to the downward spiral the market is experiencing at the moment. Chinese topmakers dominated the merino combing sector but under limited competition especially for “off types” and the dwindling volume of dusty low yielding wools. Local and overseas traders fled to safety  as incomplete or easier traded types came under buyers’ scrutiny but the distinct lack of new business once these few outstanding orders were filled saw a few buyers barely bid and the market fell as no-one is prepared to buy “on spec’ in the hope of selling that wool post purchase to downstream users. Speculation has completely gone from the modern day traders psyche. It seems no buyer is risking purchasing any quantity of wool that hasn’t been sold on down the processing pipeline. It’s interesting to note 1.2% more wool has been offered to date this season than last and 7% more has been sold even though the market is a massive 37% cheaper. Just the 2 eastern seaboard centres are in action next week with 22,300 bales on offer. In this demand-poor climate, this may be too much wool.

Southern Aurora Fwd Prices            

Micron

Date

Low

21

Oct/Nov 20

985

Main Buyers (This Week)

1

Endeavour Wool

2799

2

United Wool

2558

3

Tianyu Wool

2299

4

Techwool

2140

5

Fox & Lillie

1202

6

Aust. Merino

1086

Eastern Market Indicators (AUD cents/kg clean)

945 cents ê 59 cents compared with 14/08/2020

Northern Market Indicators (AUD cents/kg clean)

991 cents ê 55 cents compared with 14/08/2020

   AUD/USD Currency Exchange

0.7245 é 0.0122 compared with 14/08/2020

14 August 2020

Friday, August 14, 2020

WEEKLY MARKET REPORT

Week Ending 14th August 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S07/20

This Week

M07/20

Last Sale

S06/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1499

1484

1478

+21

2000

-501

18

1284

1275

1272

+12

1932

-648

19

1143

1141

1126

+17

1766

-623

20

1100

1093

1083

+17

1711

-611

21 1086n 1079 1081n +5 1695n -609
 26 - 788 784n (M) +4 (M) 1150n -

28

523n

525

520n

+3

835n

-312

30

-

454

421 (M)

+23 (M)

659n (M)

-205 (M)

MC

651n

651n

716n

-65

993

-342

CAN EMI STAY ABOVE 1,000??

All participants held their collective breaths this week as any downward shift in prices across the board would see the AWEX EMI fall below the 1000 cent mark - a demoralising stat that no-one, especially growers, would not want to eventuate. Thankfully this didn’t happen as slight movements both sides of a solid market had the EMI tract lower by just 2 cents to 1004. The market seemed to split into 2 directions as merino fleece wools edged higher over the course of the series to add 5 to 25 cents to their previous values. Growers seemed to accept the renewed interest from exporters as 95% of fleece types were sold. The twist in the tail came in Room 2 as skirtings < 18 micron finished in sellers’ favour by 10 cents while broader types slipped by 20 to 40 cents. Cardings was the sector that took the biggest hit as CRT/STN gave up another 20 to 60 cents while LKS tumbled by 60 to 100 cents with the carbonising types in this sector struggling to find any level of support post 1st stage manufacturing. The 3 MCIs fell by an average of 72 cents to now range between 651 on the Eastern seaboard to 669 in Fremantle. This seismic downward shift in Cardings caused the EMI to fall rather than stay unchanged or rise slightly. Crossbred’s movements were minimal as most types were up to 10 cents cheaper.

The supply and demand ratio looked about right this series as the 30,300 bales on offer were much more manageable than the previous sale’s volume. National quantities around this figure look about right relative to current demand as just 8% of the offering was passed-in. Local exporters led the consolidation on the opening day as overseas processors were caught off guard but then played catch-up in the final session to push merino combing types dearer. Some Chinese topmakers have moved some quantity to Merino skirtings with European activity concentrating on the Crossbred sector as Modiano again secured 1/3 of this sector. The EMI is now at its lowest point since August 2014 with some wools at 5 to 10 year lows. These cheaper types being used as machinery fodder to keep mills running could be an astute move in the long term as cheaper tops will be on offer when demand down the processing pipeline picks up. Fleece wools must also look attractive at these low levels especially in US$ terms - 21 micron fleece converts to 770 cents, 19s are about 815 and a 17 micron fleece type will cost about 1070 cents on today’s market, cost certainly not the prohibitive factor. After the opening sale in January these same microns were at 1315 (21s), 1350 (19s) and 1440 for 17 micron in US$ terms, even these prices not outrageous for downstream users to make money.

Can the market sustain a level above 1000 cents?? If harsher Covid-19 lockdowns come back in force in the northern hemisphere we may see the EMI collapse even further. Many good judges thought 1000 would be the low point - they may unfortunately be proved wrong. Melbourne’s sale may be held via Zoom next week and extended to 3 days due to Covid-19 restrictions.

Southern Aurora Fwd Prices            

Micron

Date

Low

21

Oct/Nov 20

1075

Main Buyers (This Week)

1

Endeavour Wool

2984

2

Techwool

2962

3

Lempriere

2929

4

Aust. Merino

2316

5

Tianyu Wool

2207

6

Modiano

1954

Eastern Market Indicators (AUD cents/kg clean)

1004 cents ê 2 cents compared with 07/08/2020

Northern Market Indicators (AUD cents/kg clean)

1046 cents é 2 cents compared with 07/08/2020

   AUD/USD Currency Exchange

0.7123 ê 0.0066 compared with 07/08/2020

7 August 2020

Friday, August 07, 2020

WEEKLY MARKET REPORT

Week Ending 7th August 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S06/20

This Week

M06/20

Last Sale

S02/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1478

1476n

1638

-160

2117

-639

18

1272

1269

1428

-156

2075

-803

19

1126

1123

1279

-153

1923

-797

20

1083

1081

1229

-146

1909

-826

21 1081n 1067 1228n -147 1900n -819
 26 765n 784n 866 (M) -82 (M) 1320n -555

28

520n

520

574n

-54

1000n

-480

30

-

431n

466n (M)

-35 (M)

793n (M)

-362 (M)

MC

716n

733n

801n

-85

1040n

-324

A DISASTROUS RESUMPTION!!

While the 3 week winter recess was a welcome break from wool sales and a chance for everyone to catch their breath, it did little to enhance the positive market direction of prices we saw in the 2 opening sales of the season. As is always the case the lag time in receivals saw volumes of wool for the resumption build up to 47,000 bales and the FRX ascended by 2.5 cents to almost 72. This, coupled with a wait and see approach by many buyers, spelled disaster for the resumption of sales as talk of a price reduction of 60/80 cents was well and truly on the cards. If this was only true!! The market opened far worse than this predicted fall as all sectors fell by 40 to 165 cents. The AWEX EMI fell by 101 cents on the opening day of sales. The market steadied in the second session but still suffered losses. By week’s end the EMI retracted by 128 cents (11.5%) to just 1006 with the falls in US$ terms not as bad - a 63 cent drop to 723.  Merino fleece types fell by 145 to 165 cents while skirtings gave up 70 to 120 cents. Merino cardings also suffered heavy losses, washing types (< 3%VM) lost 50/70 cents while carbonising types > 3% VM fell by 80 to 120 cents. Crossbreds were the least affected sector with losses ranging from 40 to 60 cents.

The opening day’s fall of 101 cents was the biggest daily fall of the EMI for exactly 12 months. The fall in % terms in the opening session of 8.9% was the largest daily fall in 17 years. The weekly collapse of 128 cents is the largest since April when it lost 155 cents. The % fall of 11.5% for the week is the largest weekly fall since 1991 when the floor price was abolished and the market nosedived by 39%. The passed-in rate soared to 30% nationally, 51% in Fremantle with their opening session saw them with a pass-in rate of 65%. Another sad statistic is the year-on-year comparison of the EMI, 1006 to 1676 a year ago, a 40% drop in the market.  

No type was immune to the virtual, almost complete lack of interest from some exporters as the “wait and see” approach cruelled the market. Many in the industry questioned the 3 week recess under current circumstances should it have been shortened to 2 weeks and try to reduce the opening sale’s volume to a more manageable quantity that the subdued demand may have been able to cope with. As it turned out 42,700 went to auction with 4400 bales withdrawn and 12,800 passed-in to see only 30,000 bales sold to the trade but this looked to be far too much wool for the trade to handle at this stage. While prices collapsed competition was more widespread as European, Japanese and Indian inquiry lifted, as the major European top-maker, Modiano, bought 30% of the XB selection. Top-makers led the buying lists but enquiry further down the processing pipeline is almost nil, however, low prices can often deliver higher demand and eliminate the stumbling block of oversupply from held grower stocks and passed-in wool. Hopefully the market can steady next week with 33,000 bales on offer. No one wants a repeat of August 2019 when the EMI lost 379 cents - 1754 to 1375.

Southern Aurora Fwd Prices            

Micron

Date

Low

21

Aug/Sept 20

1060

Main Buyers (This Week)

1

Techwool

4799

2

Tianyu Wool

3784

3

Endeavour Wool

3230

4

Modiano

2447

5

United Wool

1956

6

Fox & Lillie

1822

Eastern Market Indicators (AUD cents/kg clean)

1006 cents ê 128 cents compared with 10/07/2020

Northern Market Indicators (AUD cents/kg clean)

1044 cents ê 131 cents compared with 10/07/2020

   AUD/USD Currency Exchange

0.7189 é 0.0253 compared with 10/07/2020