WEEKLY MARKET REPORT

Week Ending 29th January, 2021

 AWEX Northern Micron Indices Comparison

BIG JANUARY LIFT IS DELIVERED AGAIN!

Melbourne’s dearer market on the final day of last week’s sales was just a taste of what was to come this week as all buyers unanimously were predicting a dearer market by at least 30 cents. This would have the market in the north rise by a minimum of 60 cents as we were well behind the Melbourne stand-alone market of last Thursday when some of their MPGs added up to 60 cents. From the opening lot prices skyrocketed with every fleece indicator in Sydney adding 100 to 140 cents to their previous values. The final day’s auction was more subdued with modest increases being recorded but, looking at some of the individual prices, some were better and some slightly cheaper than the quotes AWEX released after the sale. Most buyer sentiment was that the market “had the wobbles”. Still, by week’s end, it was a great result as the AWEX EMI climbed by 89 cents to 1291 cents with a 51 cent rise in US$ terms to 985 as the FRX fell by 1.5 cents to 76.25. All fleece indicators added 110 to 145 cents with virtually no type neglected and discounts for VM or any other fault shrinking as just 3.3% of the fleece offering in the north failed to sell. Skirtings were also swept up in the mad dash for wool as the large increases on the opening day were followed up by small gains in the final session but no hint of the market getting the jitters. Overall increases were 150 cents for the < 18 micron, < 2% VM types out to 19 micron jumped by 90 to 120 cents with the broader types looking 70 to 90 cents dearer. Of course, growers welcomed these substantial gains as just 36 bales-2.1%- failed to sell. Cardings also had major gains as the 3 centres’ MCIs are now all above 900 cents, 906 to 952 with the Sydney and Fremantle MCIs lifting by an average of 86 cents as all types in this sector (finer than 19 micron) added 100 to 130 cents with the broader selection 60/80 cents to the good. Crossbreds had their largest weekly rise since late October with 26.5 and finer adding 60 to 80 cents with the broader microns posting gains of 50/70 cents.

History tells us that for quite some years the market experiences a big lift in January. This year we had to wait till the final week of the month - but it happened. A 7.3% gain in the market for this series sees it at its highest point since mid-April with 19s and finer actually higher by as much as 459 cents (16.5 micron) with the broader wools up to 215 cents cheaper (21s). The recent pattern before Christmas when a big rise was on the market would react swiftly in the opposite direction and lose all the gains and momentum just as quickly. When the market has triple figure gains selling anything at the new level becomes almost impossible, 2 major buyers we spoke to yesterday said they hardly sold a bale on Wednesday night. This lack of sales became apparent in Fremantle late yesterday when the market gave up some of Wednesday’s gains - 20s and 21s now 65 and 90 cents behind the East coast levels with < 19.5 10 to 30 cents lower. This doesn’t auger well for next week as most forecasts are for a market to react in the negative hopefully not to the extent that we saw on several occasions pre-Christmas.

Traders and their Chinese counterparts led the price recovery this week. Bids well above the market were being received late last week and on Monday which quickly converted into instant and steep price rises in the opening session. The call for new business followed the rising market injecting further impetus into the gains. The smaller than anticipated offering of <40,000 bales and the depreciating FRX and demand from new forward and relatively prompt shipment orders also contributed to the (at times) frantic buying. 47,000 bales are on offer next week. Hopefully the EMI stays above 1250 cents.

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Main Buyers (This Week)

WEEKLY MARKET REPORT

Week Ending 22nd January, 2021

 AWEX Northern Micron Indices Comparison

MARKET CRACKS 1200 HELPED ALONG BY SUPERFINES!

The market continued on from the solid start of last week with all sectors of the market fully firm to dearer. The national catalogue was predicted to be 54,000 bales early last week but was reduced heavily to 44,250 by the close of selling in Melbourne on Thursday, a drop of 18%. The pass-in rate fell to 7.6% with the dearer market to see 40,880 bales sold. The AWEX EMI gained 30 cents (2.5%) to 1202 and 27 cents in US$ terms to 934 as the A$ ascended slightly (77.70c), a change of 0.25%. Emphasis was on the sub 18.5 micron types in both sale rooms with fleece types 17 and finer posting gains of 105 cents while 17.5 to 18s added 60/75 cents and 19.5 in buyers’ favour and broader microns -15 cents. Skirtings added some impressive numbers from the opening sale as 18s and finer lifted 60 to 90 cents with broader lots 20 to 40 dearer. The carding sector again performed well with the 3 centres averaging a 41 cent gain. The cut off point for gains was similar to their combing counterparts; 18 micron and finer gained 35 to 50 cents while broader types lifted by 20/30. Crossbreds also had a reasonable sale as 26 and finer were in buyers’ favour with broader lots up to 10 cents dearer. As was the case last week, growers were looking for more of an increase as 17% was passed-in.

Finer wools certainly look to be the flavour of the month. The push for < 18 micron types started before Christmas and has continued in earnest over the past 2 sales. Broader wools seem to be in a holding pattern with the difference between 16.5 and 21 micron in Melbourne 1,055 cents (2224 to 1169) - this gap a long term average price difference. The gap in July (Sale 1) was just 500 cents, 1694 to 1194. One reason given for the widening price differential is the change of micron profile over the past 12 months. With good seasonal conditions over a vast area of wool growing districts the clip has broadened up with sheep not suffering from drought conditions and wools 19 micron and broader becoming more abundant and less wool finer than 18 micron. This situation is a complete reversal to what was happening in the drought.

As has been the case for some time Chinese buyers and forward traders dominated the market along with their top-makers and indent buyers. Showfloor chatter centered around the potential for large Chinese government uniform orders being placed. This is in stark contrast to the trouble that other exporters are having with China as their government is one of our largest single customers. Enquiry for forward offers continue to flow from the sub-Continent and Europe but the successful conversion rate to written orders is a long way off normal support from these two important destinations. The recent announcement that the tariff-free quota in China for the import of clean Australian wool is to be increased by 5% is welcome news. The increase of 3,600 tonnes of clean wool is part of the scheduled increase of 5% each year until 2024 when the quota will reach 44,300 tonnes. The rest of the clip that is shipped to China attracts just a 1% tariff which sees in this financial year 38,300 tonnes of clean wool which equates to 333,000 greasy bales free of tariff.

Next week’s national offering is very similar to this sale, 44,000 bales. The market finished very strongly in Melbourne on Thursday when they sold in isolation. As the market stands at the moment, 16.5 to 20 micron is averaging 40 cents higher in Melbourne than Sydney with all participants expecting our market to catch up to Melbourne next week when sales resume.

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 15th January, 2021

 AWEX Northern Micron Indices Comparison

A SOLID, STEADY START!

It’s been 4 weeks since our last report and plenty has happened on a global front. Political chaos in the US, the pandemic almost out of control in many countries with vaccines released (but slower administering than governments would like) to good summer storms over big areas to set up a good late summer season and the recommencement of wool sales. All participants were nervous about the start of sales for the new year: a big anticipated offering for the opening 2 sales of 111,500 bales and the appreciating A$ over the recess to above 78 cents last week (3% higher than the close before Christmas) led to talk of the market losing 30/50 cents and, in fact, a tough 2/3 weeks was all the talk with the large volumes and the high FRX. By last Friday the chatter had turned positive to have a market solid at least for the biggest sale since March. The EMI lifted by a modest 15 cents to 1172 and 33 cents to 907 in US$ terms due to the rising A$. The finer microns < 18.5 performed the best gaining 10 to 60 cents - the finer the micron the higher the rise as 19s and broader look to be in a holding pattern. Skirtings also added to their pre-Christmas values with identical gains to the fleece wools, finer than 18 micron 10 to 60 cents higher with the increases higher with the finer microns. Cardings also had a good opening to the year with the 3 centres averaging a 38 cent rise with all types in this sector rising by 10 to 50 cents. The large XB catalogue (24% of the national total) was the least performing sector of the sale with all buyers struggling to do business and recovery could be a long time off. The market was in sellers’ favour (up by 10 cents) but growers were looking for bigger increases as 20% was passed-in.  

As far as the national volume was concerned it was the same old story as last year. The original quantity on offer didn’t eventuate as Monday’s forecast of 56,840 shrank to 52,290 - a reduction of 4,550 (8%) with a pass-in rate of 11% saw 46,500 bales sold to the trade. Focus was on the sub 18 micron types as the improved seasonal conditions in a lot of wool growing areas will see microns broaden out with less super-fine types available. On the Chinese processor side, the current lack of competition from Europe and India in the super-fine sector has opened up big export opportunities for them to supply yarn and tops to these destinations. Traders and Chinese top-makers dominated all sectors buying lists.  

Away from wool sales but certainly related is the current shortage of shearers on the Eastern seaboard. All contractors are reporting of a big shortage of shearers and shed staff. Many contractors are running well behind schedule and are splitting teams to try and catch up. We know of several clients that had shearing booked in well before Christmas that are still on a “waiting list“ or just getting sheep shorn now. Weekend shearing and growers offering to pay over $4.00/head to attract shearers is not uncommon. The problem has been brewing for months now which has been exacerbated by the pandemic. Early last year when international travel was closing down a lot of Kiwi shearers went home and have not been able to travel back to Australia. Also the shearing rate in NZ has lifted substantially to now be comparable to the rate here. This will help Kiwis stay at home where they can earn the same $ that they would have here and contend with a lot less merinos there thus depleting shearer numbers here for the long term, not just while Covid-19 is on the radar.  Also the closed borders in Australia late last year prevented any interstate travel which is part of normal shearing practice. Shearing shed and accommodation standards are always a problem and some contractors are saying if these are not up to a certain standard they may be in a position to “pick and choose” their sheds depending on the facilities or lack of. Just under 50,000 bales are on offer next week with a solid market all the talk.

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