Weekly Market Reports


26th March, 2021

Friday, March 26, 2021

WEEKLY MARKET REPORT

Week Ending 26th March, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S39/20

This Week

M39/20

Last Sale

S38/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2102

2068 2063
+39 1883n +219

18

1799

1785

1769

+30

1754

+45

19

1571

1573

1566

+5

1665

-94

20

1365

1364

1350

+15

1632

-267
21 1280n 1273 1262n +18 1609n -329
 26 - 788n 785n (M) +3 (M) 1081n (M) -293 (M)

28

510n

519

510n

0

871n

-361

MC

876n

898n

864n

+12

987n

-111

LOGISTICS DELAYS HINDER MARKET’S RISES!

Many things are conspiring to dampen the wool market’s ability to go to “the next level”. A common theme was that when the vaccines were rolled out en masse the lockdowns and restrictions were being eased and consumers would go back to their old spending habits raising the demand for wool significantly. This may well be the case but recovery seems to be getting pushed back further and further - well into the 2nd half of this year and even into 2022 - as some European countries now experience a 3rd wave of Covid-19 and a much slower than hoped vaccination rollout. Great Britain and the US look to be well on track with their vaccines but Europe is very slow and, in fact, some countries have reintroduced lockdowns and restrictions that will slow the rate of economic recovery in the Northern Hemisphere.

The market only added 8 cents to its overall value taking it to 1285 for the EMI despite the FRX falling by almost 3% to 76 cents from over 78 a week ago. With the falling A$ the market, in US$ terms, followed suit losing 23 cents to 977, a good result for all as growers benefitted from a small rise in the market and exporters were on the receiving end of a cheaper buy in price for their orders. Finer fleece types saw the best competition as < 18 added 30 to 40 cents with broader lots 5 to 20 cents better. Growers warmed to this renewed buying activity as just 67 bales (1.7%) were passed in. Skirtings added 15 to 25 cents for 18.5 micron and broader with lots finer than this fully firm. Cardings also upped the ante with all types in this sector lifting by 5 to 30 cents depending on style, VM and micron. All centres’ MCIs are now aligned in price (876 to 898). Crossbreds had the least movement of all the sectors with most microns in sellers’ favour by up to 10 cents.

With the favourable FRX and the vastly reduced national catalogue, from 46,500 bales late last week to 38,500 bales offered (a 17% reduction) and the smallest offering since December - normally the market could’ve risen by 20 to 30 cents. No doubt the FRX and the smaller volume did help the market with all other currencies used in wool trading prices actually falling by 2 to 3%. Despite the wool market’s level with consumer demand still nowhere near where it was pre pandemic, the single issue restricting the market’s ability to rise is the seemingly worsening logistical issues from dumps to final destination. The delays in shipping are verging on chronic with exporters receiving multiple cancellations of ships leading to weeks and now in some cases months of delays tying up 10s of millions of $ in finance. Some reports indicate the notice time for cancellations are extremely short with wool dumped and ready for loading onto the vessels at the port being jettisoned off delivery and a new schedule “subject to change“ being issued. Some exporter’s containers have been cancelled 3 times from loading onto ships. India and European destinations are faring worse than China as ships bound for these ports are low in number and container space very limited and booked out well in advance of what was the norm a year ago. Next week has a national catalogue of 48,800 bales on offer. Hopefully a bit more business has been written to lift the market.


        Southern Aurora Fwd Prices            

Micron

Date

Low

21

April-June 21

1270

Main Buyers (This Week)

1

Techwool

4682

2

Tianyu Wool

3571

3

Endeavour Wool

3327

4

Fox & Lillie

3024

5

United Wool

2363

6

PJ Morris

1190

Eastern Market Indicators (AUD cents/kg clean)

1285 cents é 8 cents compared with 19/03/2021

Northern Market Indicators (AUD cents/kg clean)

1356 cents é 14 cents compared with 19/03/2021

   AUD/USD Currency Exchange

0.7606 ê 0.0227 compared with 19/03/2021


19 March 2021

Friday, March 19, 2021

 WEEKLY MARKET REPORT

Week Ending 19th March, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S38/20

This Week

M38/20

Last Sale

S37/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2063

2039n 2117
-54 1848n +215

18

1769

1770

1809

-40

1715

+54

19

1566

1564

1603

-37

1644

-78

20

1350

1366

1405

-55

1628

-278
21 1262n 1283 1307n -45 1632n -370
 26 - 785n 795n (M) -10 (M) 1095n (M) -310 (M)

28

510n

511

520n

-10

871n

-361

MC

864n

903n

880n

-16

1004n

-140

FINANCIAL CONSTRAINTS HINDER MARKET!

The reduction that the market had this sale was what many buyers had thought was coming for a few weeks. The fact that the market had traded in such a narrow band (1318 to 1309) for the past month had surprised many given the large national volumes on offer, the upward shift in the FRX (the wrong way for woolgrowers) and exporter troubles with finance and shipping delays. The AWEX EMI gave back 32 cents to 1277 (2.5%). The fall was less dramatic in US$ terms as the FRX rose to 78.35 cents, up by 0.85 of a cent, the EMI losing 14 cents to sit at 1000 in US$ terms. All sectors of the market fell. Fleece wools lost 35 to 60 cents across the board with only the very best style type with the exact specifications giving back 20 cents. Skirtings followed the fleece pattern of price direction with the better style low VM (< 2.5%) falling by 30/50 cents with all others losing 40 to 60 cents.  Cardings were overall cheaper in Sydney and Fremantle with both MCIs now in the mid 800s with Melbourne gaining 14 cents to lift above 900 cents to 903. Broader LKS were the main offender in Sydney to have its MCI fall by 16 cents to 864 as they lost 30/40 cents with most other types fully firm for the sale. Crossbreds opened the series cheaper but firmed in the closing session to finish the week in buyers’ favour.  The national pass-in rate climbed to 17% as more growers resisted the weaker prices.

This week’s fall marks the biggest downward correction for the year to date. Since the market rose in January the trading band of the EMI has been very tight (1275 to 1318) and we remain in the price bracket despite this sale’s fall. This sale saw the 1 millionth bale sold to the trade this season with 11.5% (106,000 bales) sold to the trade more than last season at the same time with total offerings up by 63,350 bales (5.6%). The overall value of the clip sold this season to date works out to be $1415/bale. The market is 160 cents (11%) lower than the same week last year. The gap was 400 cents before sales started back in January - the gap narrowing due to the big price collapse this time last year as demand fell off the cliff when the market lost 308 cents (1609 to 1301) in the January to Easter period. On the flipside in US$ terms the market has risen by 200 cents from 800 to 1,000 - a 25% increase. This is due to the FRX climbing by 40% from 55.75 to 77.35 and a clear illustration of just how much demand fell away last year when the FRX was very low.

As we alluded to earlier, financial constraints due to shipping delays and the constant run of weekly volumes in the high 40,000s finally took its toll on the market. The cautious ‘money management’ by buyers that led to a stable market finally relented with risk averse purchasing taking over to match the softer demand signals. The problems with delays in shipping wool that is tying up critical finance now flows all the way back to the wool dumps. The dumps are now so clogged up with wool waiting for delayed vessels they are unable to take delivery of wool early. This has led to dumps calling for wool to arrive the day prior to the ship’s cut-off. This means dumping, containerisation and reaching the port has to happen the same day instead of the usual 2/3 day lag time. This means shipping from our end has compressed in time with deadlines for wool down to 1 day rather than the 2/3 day time allowance that was the norm. Shipping companies estimate a 50% fall in the number of container ships in operation compared to 12 months ago. A ship with wool would arrive in China every 2-4 days, now its 1 every 7 to 10 days. Some buying companies have had to go to their banks “hat-in-hand” to get extra funds to buy wool while finance is tied up with wool on water. Market talk is firm for next week.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1250

Main Buyers (This Week)

1

Techwool

6383

2

Endeavour Wool

4019

3

Fox & Lillie

3836

4

Tianyu Wool

3798

5

United Wool

2974

6

Aust. Merino

2382

Eastern Market Indicators (AUD cents/kg clean)

1277 cents ê 32 cents compared with 12/03/2021

Northern Market Indicators (AUD cents/kg clean)

1342 cents ê 33 cents compared with 12/03/2021

   AUD/USD Currency Exchange

0.7833 é 0.0086 compared with 12/03/2021


12 March 2021

Friday, March 12, 2021

WEEKLY MARKET REPORT

Week Ending 12th March, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S37/20

This Week

M37/20

Last Sale

S36/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2117

2121n 2126
-9 1987 +130

18

1809

1825

1825

-16

1850

-41

19

1603

1601

1597

+6

1768

-165

20

1405

1400

1396

+9

1748

-343
21 1307n 1304 1297n +10 1743n -436
 26 765n 795n 804n (M) -9 (M) 1123n -348

28

520n

530

525n

-5

875n

-355

MC

880n

889n

869n

+11

1054n

-174

MARKET REMAINS STABLE!

Once again we saw a market that struggled to move as stability is the name of the game. The AWEX EMI gave back just 1 cent to 1309. The FRX lost a third of one cent to sit around mid-77 cents as the market added 6 cents to its value in US$ terms to 1016. Looking at the 3 centres we had almost 3 different results. Sydney’s fleece types fell by 5 to 15 cents for < 18s as 19s and broader had modest gains of 5 to 10 cents. Melbourne’s market was overall cheaper with all microns 5 to 10 cheaper bar 17s and 18.5 that rose by 5 to 15 cents. Fremantle fared the best of the 3 centres with 19.5 micron and finer 15 to 30 cents up with 20s and broader gaining up to 10 cents. Fremantle’s indicators are on par or up to 26 cents higher than their east coast counterparts - normally a good sign that the market here can play catch up to the higher levels.  Despite the up and down movements of the fleece market, just 4.6% was passed-in. Skirtings followed the fleece price direction as the opening day’s gains of 10/20 cents were given back in the final session to have this sector unchanged. Cardings continued their positive run as the 3 centres averaged a 19 cent gain to their MCIs as STN and CRT added 20 to 50 cents while LKS were fully firm. The fickle XB market gave up ground this sale as fine and broad microns (26 and 30) fell by 10 cents with the middle microns cheapened up by 30 to 40 cents.

The past few sales have seen the gap between superfine and medium types edge closer as the season for offering < 18 micron draws to a close leading up to Easter. Another widening gap is between medium type merinos and XBs as a global oversupply of 28 micron and broader hampers this sector of the market to have little chance of improving in the short term as demand is sluggish with full recovery from Covid-19 a long way off. On the international scene global demand for New Zealand wool is very strong albeit from a very low base with the market in South Africa continuing to edge further ahead of the Australian market with 19 to 21 micron well ahead of our prices as buyers push hard to secure wool from there as their selling season draws to a close. The selling season in South America is all but finished with virtually all their greasy wool at local mills to keep machinery running through the winter. Demand signals range from terrible in some sectors to enquiry emerging in other areas as supply will run short with the selling season closing in the 2 other main suppliers. Early stage processors are continuing to buy wool and build up a stock-pile ready when for when downstream processors call for “tops” kicks back into gear. Many in the wool pipeline are amazed the greasy market has lifted so dramatically from its low point of 858 cents in early September to +1300 today, a massive 66% gain given that demand from some of their customers is lack-lustre or non-existent with some delaying further purchases expecting a major shift in price.

In a global showcase of Australian Merino wool the America’s Cup team Luna Rossa Prada Pirelli has benefited from the performance attributes of the fibre in its sailing uniform thanks to a partnership with AWI’s subsidiary, The Woolmark Company. The partnership of The Woolmark company with this legendary Italian team highlights the strong link between the world of sport and Australian Merino wool as a premium performance fibre. The partnership has achieved immense media coverage and is influencing global consumers to consider and ultimately purchase Australian Merino wool for activewear. The Woolmark logo can be seen on the team Italy boat when the spinnaker is unfurled.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1270

Main Buyers (This Week)

1

Techwool

6292

2

Endeavour Wool

3545

3

Fox & Lillie

3486

4

Lempriere

2780

5

Tianyu Wool

2738

6

Kathaytex Aust.

2498

Eastern Market Indicators (AUD cents/kg clean)

1309 cents ê 1 cents compared with 05/03/2021

Northern Market Indicators (AUD cents/kg clean)

1375 cents ê 3 cents compared with 05/03/2021

   AUD/USD Currency Exchange

0.7747 ê 0.0037 compared with 05/03/2021


5 March 2021

Friday, March 05, 2021

 WEEKLY MARKET REPORT

Week Ending 5th March, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S36/20

This Week

M36/20

Last Sale

S35/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

2126

2103 2125
+1 2072 +54

18

1825

1833

1840

-15

1932

-107

19

1597

1611

1611

-14

1826

-229

20

1396

1405

1397

-1

1803

-407
21 1297n 1309 1295n +2 1783n -486
 26 - 804n 781n (M) +23 (M) 1153(M) -349 (M)

28

525n

568

523n

+2

884n

-359

MC

869n

868n

859n

+10

1090n

-221

FALLING AUSSIE DOLLAR SAVES THE MARKET!

Stability looks to have set in for the wool market as this week’s sale produced just a 4 cent gain to 1310 cents. This follows on from the previous 2 series where the market has fluctuated by only 12 cents (1318 to 1306). All the pre-sale talk was for a cheaper market with the FRX reaching a 3 year high to climb above 80 cents (twice) which could’ve had the market on the back foot to the tune of 30/40 cents. Fortunately the A$ retreated to low 77 cents on Friday, this allowing buyers to stay in the game and do sporadic volumes of business to have a market that was just in sellers’ favour. With the falling FRX the market, in US$ terms, shed 20 cents to 1020. Sydney’s market wasn’t as positive as Melbourne’s with most microns either side of fully firm apart from 18 to 19 micron which shed 10 to 15 cents. Skirtings faded in the final session to finish the sale 10 cents cheaper. Cardings halted their run of 4 cheaper weeks with the MCI adding 10 cents to 869 as most types in this sector posting gains of 10 to 20 cents with < 17 micron lots up to 40 cents to the good. Crossbreds also had a solid sale with broader types > 27 micron fully firm and finer lots 10 to 20 cents higher. Australia’s biggest buyer and trading company (Techwool) dominated buying lists for most types with solid competition from topmakers and processors alike. Growers certainly warmed to the stable market as the passed-in fell by 9% to 9.3% with XBs still the biggest contributor to passed-in wools.

The fall in the FRX produced a scenario that sustained the current price levels despite a not-so-ideal retail economy. The softer FRX gave overseas mills and processors a cheap buy in price if operating in US$ or Chinese Yuan (CNY). The price advantage added up to 2%. As we have mentioned recently the logistic delay in shipping wool to its final destination is restraining buyers financially with additional business unable to be written. Knocking back new business due to financial constraints is nothing new but is just part of the business with the delays in shipping and therefore payments representing 2 weeks of exporters normal auction buying budgets, thus hampering further gains the market might have had with quicker finance available.

Much has been written in various media outlets recently regarding premiums for non-mulesed wool and the demand for it. Nearly all demand is coming from Europe and, with that sector of the market still a long way from being fully operational, premiums were and still are sporadic at best. Some media outlets reported “good premiums” of 20/30 cents being paid recently. A 1 to 2% premium can hardly be called that in most cases.  Most growers with non-mulesed wool are being urged to join a quality scheme called RWS (Responsible Wool Standard). More and more orders that request NM wool are specifying RWS certification as well. One grower who we sold wool for this sale looked to benefit from being in this scheme as the premiums ranged from 80 to 200 cents clean for the fleece wool that averages 4 to 5% VM. This amount of burr would attract a discount of 100 to 160 cents clean normally.   

Next week’s offering has just shy of 50,000 bales on offer to the trade - pretty much a normal volume when looking at the totals since January. Barring any disaster with the FRX ascending, the market should hold around these levels with still no word on when the trigger will be pulled on the Chinese government uniform orders. For those growers who wish to follow the Cumnock Ewe Competition next Tuesday there are a few seats left on the bus that will be going around the farms that have entered sheep. Contact Scott Darmody on 0402 772 342 or scott@macwool.com.au for any information regarding this good day out.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Apr/May 21

1270

Main Buyers (This Week)

1

Techwool

7483

2

Fox & Lillie

4096

3

Tianyu Wool

3170

4

United Wool

3077

5

Endeavour Wool

2369

6

PJ Morris

2252

Eastern Market Indicators (AUD cents/kg clean)

1310 cents é 4 cents compared with 26/02/2021

Northern Market Indicators (AUD cents/kg clean)

1378 cents ê 2 cents compared with 26/02/2021

   AUD/USD Currency Exchange

0.7784 ê 0.0179 compared with 26/02/2021