Weekly Market Reports


19 February 2021

Friday, February 19, 2021

 WEEKLY MARKET REPORT

Week Ending 19th February, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S34/20

This Week

M34/20

Last Sale

S33/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2145

2144 2125
+20 2082 +63

18

1851

1878

1786

+65

1945

-91

19

1625

1639

1536

+89

1839

-214

20

1402

1419

1340

+62

1813

-411
21 1294n 1318 1223n +71 1798n -504
 26 765n 775 734 (M) +41 (M) 1151n -386

28

515n

536

510n

+5

894n

-379

MC

866n

872n

889n

-23

1105n

-239

MARKET CRACKS 1300! YIPPEE!!

The Chinese New Year celebrations didn’t stop the wool market from advancing this week to break through the 1300 cent mark for the 1st time in almost 12 months. Often around Chinese New Year can be a difficult time to sell wool due to mills being shut down and a sometimes general lack of interest but not the case this year. The AWEX EMI shrugged off the lacklustre 2 sales that saw the market fall 16 cents to record a 43 cent gain to 1318. The rise was just as impressive in US$ terms, a 37 cent jump to break through the 1000 cent mark to 1022 as the FRX was stable for the week at 77.50 cents. The market looks to be performing well in regard to FRX movements. 12 months ago the A$ was 66.50 cents - 16% less than the current level. The fear that medium micron wools (19 and broader) were getting left behind in the market rise were allayed this series as they posted the largest gains, 18s and coarser gained 60 to 85 cents (some better style types were up to 100 cents dearer). Fine fleece types did ascend also but the gains were restricted to 20/30 cents, a nice warm-up for the designated super-fine sale in Sydney next week. Skirting price movements were based purely on VM. All types < 3% VM with good AM results added 35 to 55 cents for the week with all burrier types fully firm. The carding sector continued on from the losses of the past fortnight to average a 17 cent loss over the 3 centres. LKS/CRT, broader than 17.5 micron, fell by 10/20 cents with STN taking the brunt of the losses retreating by 40 to 60 cents. Crossbreds had a mixed sale with combing types solid to 40 cents dearer but burry carding types and XB LMS were punished with some lots receiving only token bids. We passed-in 55% of all our XB LMS offered with talk that the road ahead for XBs could be a long one before there is any sign of improvement.

The EMI is closing in on 12 month highs. Not since March last year has the market been at these levels when the full effects of the pandemic were being realised. The market has risen by 161 cents (14%) since the resumption of sales with the gap between 18 and 21 micron widening. At the opening sale in January it was 444 cents with the gap extending to 569 cents this sale. The old saying was that 18 microns should be 50% higher than 21s (which is now getting close), 1294 to 1851 is a 43% difference. The gap going broader was much the same, 28 micron should always be running at about 50% of what 21s are worth. This is certainly not the case with 21s at 1294 and 28s only at 515 cents again about 40%. As we mentioned earlier the Lunar New Year can adversely affect the wool market. Enquiry from China was reportedly slowing early in the week but very quickly changed to talk of new business being written in China and conversion to forward contracts from India. Exporters commented on how easily the new competition transferred price pressure onto all users as levels rose. Traders dominated the merino combing sectors with topmakers and indent buyers unwilling to be convinced of the longevity of current price levels. Processors and topmakers looked to XBs and cardings for value for money as competition displayed buying patterns pre-pandemic economy methods of operations. Something that has come to light is the delays in shipping wool to China. The ships seem to be getting held up in Singapore and delays of 2 to 4 weeks are common which is holding up wool deliveries to China and tying up critical finance that can be used for future purchases but has not had an adverse effect on the market to date.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1310

Main Buyers (This Week)

1

Techwool

6659

2

Fox & Lillie

4692

3

Endeavour Wool

3375

4

United Wool

2871

5

Kathaytex Aust.

2553

6

PJ Morris

2515

Eastern Market Indicators (AUD cents/kg clean)

1318 cents é 42 cents compared with 12/02/2021

Northern Market Indicators (AUD cents/kg clean)

1392 cents é 40 cents compared with 12/02/2021

   AUD/USD Currency Exchange

0.7751 é 0.0025 compared with 12/02/2021

12 February 2021

Friday, February 12, 2021

 WEEKLY MARKET REPORT

Week Ending 12th February, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S33/20

This Week

M33/20

Last Sale

S32/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2125

2142 2123
+2 2063n +62

18

1786

1806

1780

+6

1928

-142

19

1536

1547

1532

+4

1833

-297

20

1340

1333

1346

-6

1803

-463
21 1223n 1224 1243n -20 1773n (M) -549 (M)
 26 - 734n 799n (M) -65 (M) 1160n (M) -426 (M)

28

510n

518

555n

-45

866 (M)

-348 (M)

MC

889n

892n

898n

-9

1108n

-219

HAPPY CHINESE NEW YEAR, HOPEFULLY!

Since the big rise of 2 weeks ago the market had pretty much marked time but, by the numbers, has cheapened up slightly. The AWEX EMI lost 10 cents this sale to 1275 following on from the 6 cent fall the previous series with XBs, cardings and broader merino fleece types (20 micron and stronger) the main contributors to the EMI falling. This week’s largest offering since the opening sale of the year and the strengthening FRX gave buyers an opportunity to relax their buying patterns and take stock of what has been a frantic start to the year. With the stronger A$ the market rose slightly in US$ terms, up by 6 cents to 985. The merino combing types fared well despite the increased volume with all microns adding up to 10 cents bar 20s and broader which lost 5 to 20 cents. The worry for these broader types is the increase in volume of these microns due to the good season pushing clips broader with many growers reporting their wool 1 to 1.5 micron coarser than last year. The demand for these broader types has not increased as the volume has; with the opposite effect on finer clips - less in volume and increased demand. The pattern of price movements was the same in the merino skirting sector, fully firm for types < 20 micron but 10 to 20 cent losses for the broader types. A we mentioned earlier the fall in cardings contributed to the overall fall in the market. Washing types (< 2% VM) finished the sale unchanged with the 3% VM and higher lots losing 10/20 cents for the week. The MCI in Sydney fell below 900 cents to 898 - a loss of 11 cents. Just when we thought (and hoped) XBs may be on the long road to recovery, they took a large hit and were the main reason the EMI fell this week, all microns fell between 10 and 60 cents (5 to 8%).

Melbourne featured an excellent selection of Tasmanian wool this sale which seemed to woo the Italians from their slumber to underpin the solid market and increasing demand for fine and superfine types with these MPGs adding up to 45 cents in the south. You would expect these wools to be top prices for the week but it was a few lots from our colleagues in Cooma, Gordon Litchfield Wool, that sold two 14 micron lots for 3140 and 3020. Traders dominated the top positions of buying lists with top-makers, processors and indent operators all keen to purchase for their immediate needs. Apart from Chinese mills providing the backbone for current prices and the Italians chasing the “top end” clips, the largest European top-maker continues to operate with a smattering of Indian orders competing as well.  

Today marks the start of Chinese New Year, sometimes a tricky part of the year to sell wool. Many businesses are now closed for a week to 10 days which may cause difficulty in financing wool purchases for the next 2 sales. Reports have some mills already closed, some taking a 4 week shutdown and others working through the festive season to avoid workers returning from other provinces having to quarantine for 14 days. Some reports also suggest that a bit of “stocktaking” has happened over the past few sales even with demand further down the processing pipeline less than expected or needed. There is still plenty of showfloor chatter that massive uniform orders from the Chinese government are set to be placed at any time - most likely post Chinese New Year. Speculation is rife on the volume and make-up of the types of wools they will be purchasing but when it happens will it be like the charge of the light brigade?

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1265

Main Buyers (This Week)

1

Techwool

6135

2

Fox & Lillie

3804

3

Endeavour Wool

3638

4

Lempriere

2765

5

Aust. Merino

2718

6

Tianyu Wool

2613

Eastern Market Indicators (AUD cents/kg clean)

1275 cents ê 10 cents compared with 05/02/2021

Northern Market Indicators (AUD cents/kg clean)

1352 cents ê 10 cents compared with 05/02/2021

   AUD/USD Currency Exchange

0.7726 é 0.0110 compared with 05/02/

5 February 2021

Friday, February 05, 2021

WEEKLY MARKET REPORT

Week Ending 5th February, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S32/20

This Week

M32/20

Last Sale

S31/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2123

2105 2144
-21 2080 +43

18

1780

1778

1780

0

1943

-163

19

1532

1529

1537

-5

1834

-302

20

1346

1345

1340

+6

1800

-454
21 1243n 1243 1273 -30 1789n -546
 26 795n 799n 785n +10 1091n -206

28

555n

550

531n

+24

819n

-264

MC

898n

908n

906n

-8

1118n

-220

IT’S A BILLION DOLLAR INDUSTRY- OFFICIALLY!

This time last week there was some nervousness about whether the market could hold its ground after a decade long record lift of 134 cents. Fremantle’s close last Thursday saw most categories cheaper and we all thought that we could see a retreat of 30-40 cents. Fortunately this was not to be although there was some softness in patches but we look at 45,126 bales being offered which was over 5000 bales more than the previous week and one can feel reasonably happy with the slight adjustment.

This week gross sales of the Australian wool clip passed the 1 billion dollar mark which it has done every year for quite some time. This year it has taken five weeks longer to reach the milestone than last year which, when all is taken into account, is not such a bad result compared to what might have been when we were looking at the sub 1000 EMI last Spring. Hopefully we can report the 2 billion dollar mark before the end of June.

The export destination figures tell the true story of who is almost singlehandedly pushing this market along. YTD China has purchased 86% of our wool but trade sources of recent weeks say the figure is higher and over 90%. Many are asking should we be nervous about this kind of domination. The simple answer lay in the fact that the other competing destinations are simply not buying and without China who knows where this market may be? Information out of Europe has downstream processors showing year-on-year trading results down between 30% and 65% so orders are just not being placed whilst they trade out of their stock positions. Meanwhile China’s economy which faltered momentarily has rebounded on the back of strong domestic sales, particularly in the prestige apparel end. Wealthy Chinese shoppers are forced to shop at home with borders closed hence a big jump in high end fashion sales domestically. Wool has managed to avoid any of the geopolitical tensions that have affected other commodities. Wool is one of the longest traded commodities with China going back to the beginning of China’s more recent emerging affluence. Wool is a product that has a lot of value adding in China and the textile industry rates second in terms of contribution to GDP. The other helpful factor is that there are many strong, long standing relationships between the Chinese mill operators and the Australian wool industry. These relationships become critical when there is some turbulence about.

A quick glance at the above table far right sees that the gap YOY has completely closed sub 17 micron. In fact they are worth more now than 12 months ago. The 18 & 19 micron sectors are looking a lot better as well but I would be cautious just yet that the medium categories can close the gap too much in the short term. Seasonally we are beginning to see clips over a micron broader than last year so it’s easy to see where there will be some pressure on fine wool coming out of drought. I would not be as hopeful for wool above 19 micron as current production is quite plentiful.

A larger offering again next week will test the market with 52,822 bales being offered. Macwool/Carmichael will offer 1235 bales on Tuesday. Early mail suggests maybe a firm trend.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1240

Main Buyers (This Week)

1

Techwool

7734

2

Endeavour Wool

3945

3

Fox & Lillie

2879

4

Tianyu Wool

2470

5

Kathaytex Aust.

2346

6

United Wool

2290

Eastern Market Indicators (AUD cents/kg clean)

1285 cents ê 6 cents compared with 29/01/2021

Northern Market Indicators (AUD cents/kg clean)

1362 cents ê 7 cents compared with 29/01/2021

   AUD/USD Currency Exchange

0.7616 ê 0.0015 compared with 29/01/2021