WEEKLY MARKET REPORT

Week Ending 30^th March, 2018

AWEX Northern Micron Indices Comparison

NO EASTER EGGS OR SHOWBAGS FOR BUYERS THIS YEAR!!

Growers were looking forward to selling at the showcase sale to be held at the Royal Easter Show this week as the 3 previous years has seen the market rise but last Thursday’ s softening market would have had all sellers nervous. The forecast increase in quantity saw buyers release the pressure valve regarding buying strategies as the urgency to buy wool was negated by the predicted 47,000 bales. This quantity, as is always the case, didn’t eventuate as 44,800 were offered. This did not help the market though as the EMI slid 6 cents to 1772, Sydney back by 15 cents and Melbourne adding just 1 cent to its previous level. A decrease in the FRX to below 77 cents didn’t help the market either but saw the EMI (in US$ terms) also drop by 13 cents to 1364. Losses were across all the merino fleece micron ranges to 21, the least affected was 17 micron losing 10 cents while all others saw 20 to 50 cents peeled off their values as 22s and broader posted gains of 10 cents. Again, the high mid-break with high VM levels and colour/cott types were discounted heavily but lots displaying the right “specs” in most cases were solid to dearer when compared to the previous series.

Skirtings looked to have escaped the cheaper trend of the fleece room as finer lots < 18 micron and with VM < 5% came back by 10/20 cents while broader types, regardless of VM levels, remained unchanged. Cardings recorded modest rises as the MCI in Sydney edged ahead by just 2 cents to 1332. The other 2 centres also gained ground for the series as Melbourne put on 14 cents to 1341 and the stand-out of any sector was the cardings in Fremantle where their MCI added a whopping 57 cents to its value to finish at 1310 cents. Crossbreds also continued on their good run as all indicators were quoted up to 20 cents dearer.

A bit of a disappointment as the market slid for the 8^th selling day from the last 10. The sale couldn’t produce last year’s meteoric rises for the EMI of 53 cents or the good rise of 12 cents from the previous 2 years. Most growers were still happy to meet the market as just 6% of fleece was passed-in, 29 bales of skirtings not sold (1.2%), oddments and XBs cleared over 96%. In the 12 sales since the resumption in January the market opened at 1760 and peaked at 1834 on Wednesday, 28^th February, with the lowest point at exactly 100 cents (1734) behind the peak a month earlier on 31^st January. The carding market peaked at an incredible 1546 on the 16^th January only to record a huge correction over the following 2 weeks to its lowest point of 1292 on the last day of that month.

Everyone now takes a one week recess to catch their breath from a frantic 12 sales and try to work out how the market will play out through till June. The underlying factors of supply and demand will hold sway for the most part with the FRX, weekly quantities and the deteriorating quality of wool entering the market will also influence buyers purchasing strategies. Next sales volumes have exploded from 48,800 to over 57,000 bales, buyers will be under no pressure to chase wool unless a heap of business is done over the next week.

Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 23^rd March, 2018

AWEX Northern Micron Indices Comparison

MARKET RECAPTURES SOME LOSSES!

After 2 weeks of negative direction the wool market went some of the way to recovering some of those losses. The AWEX EMI posted a 27 cent rise (identical to the previous sale’s losses) to finish the week at 1778. The EMI in US$ terms was virtually unchanged, a drop of just 2 cents to 1377, this due to the erratic swings of the FRX from 78.7 last Friday to a low of 76.75 on Wednesday to settle at 76.85 cents this morning - a 2% swing at one stage to the exporters. Signs that the market might settle came through late on Monday as futures were trading solid to dearer out to the spring and early into 2019. This led to the physical market rocketing to life on Wednesday as all sectors (bar skirtings) added 20 to 50 cents. This rapid and welcome rise was somewhat tempered in the final session as the FRX influenced prices to see most types give up 5 to 15 cents. Discounts for the usual faults in the fleece sector shrunk to almost nothing as buyers chased the smaller offering to see less than 1% passed-in on the opening day.

Skirtings had a reasonable sale without benefitting from any real increases like their fleece counterparts. The finer micron < 18 and < 5% VM were quoted about 10 cents dearer as the 18/19 micron types with 5 to 8% VM lost 10 to 20 cents. Cardings had a good sale after the big first session rise - prices consolidated on the final day. Both MCIs on the East Coast averaged 30 cent gains to be back above 1300 cents (1330 and 1327) most types in this sector lifted by 30 to 35 cents. Crossbreds also were swept up in the rising market to recover last sale’s hiccup. All microns rose by 15/20 cents except 28s which leapt by 38 cents to have the XB sector record 5 weekly gains from the past 6 sales.

Plenty of factors came into play this week to influence the direction of the market. The smallest national catalogue of the year (38,200 bales), an improvement in prompt demand and a favourable FRX early in the series all had their roles in lifting the market and some buyers had already locked in at the cheaper delivered price (in US$) and other FRX which also boosted the market and for some microns (19 to 21) beyond the currency shift. Thursday’s slight pullback was almost completely blamed on the explosion in the offering for next week, a 21% increase (8000 bales) to 47,000 bales - Sydney’s volume almost doubling for the showcase sale at the Royal Easter Show. Once buyers saw these figures pressure came off to secure wool and the appreciating A$ took any urgency from buyers’ purchasing strategies.

Can the impending USA-China trade war affect the wool market?? Who knows? Stock markets and FRX fell heavily overnight and today as the Trump Administration announced tariffs of US$60 billion on Chinese imports in retaliation to theft of intellectual property. The A$ has retreated in morning trade to below 77 cents helped down by falls in key commodity prices and a slight rise in the unemployment rate. The A$ is 5.5% lower than its late January peak or 81.35 cents as the trade war and lifting of US interest rates will keep our currency under pressure and volatile.  We offer 1200 bales on the opening day (Tuesday) of the Easter Show sale, hopefully the lower A$ is enough to see the market stabilise.

Ag Concepts Fwd Prices as at 23 March, 2018

Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 16^th March, 2018

AWEX Northern Micron Indices Comparison

30 YEARS AND STILL GOING STRONG!

The wool market continued in the same vein as last sale trending down by another 27 cents to 1751. In US$ terms the step backwards was not as severe, a 13 cent reduction to 1379 as the A$ appreciated 0.75 of a cent to 78 cents. Losses were similar on both days to have all merino fleece MPGs retract by 35 to 70 cents. Buyers became more and more selective in their purchases as high mid-breaks/levels of VM were punished. On the flip-side any lots that fitted the right “specs” (high strength, low VM and mid-breaks) were chased hard and commanded premiums of 30 to 100 cents on the few good lots we had from Goolma, Mudgee, Elong and Coonabarabran. Most growers, despite the drifting prices, took the money as 94% of fleece was sold.

Skirtings also kept pace with their fleece counterparts as losses ranged from 30 cents for fine low VM   types to 50/60 cents for broader burrier types with the ever increasing volume of heavy cott and colour in theses types attracting larger discounts. For the 2^nd sale running the MCI lost 20 cents to fall below 1300 cents (1298) LKS being the main culprit peeling off 35 to 50 cents while CRS fell 20 cents and STN were quoted as fully firm. The firming market for XBs got the staggers this sale after 5 weeks of gains, the losses were minimal, 5 to 15 cents for most types, but still in good territory. Since the rises started in early February, 25/28 microns have jumped 110 to 130 cents while the 30s and broader are up to 30 cents better.

This sale’s “drifting”?? market demonstrated the under-current of swelling demand as late in the session the falling prices on several types was arrested to give hope that the sliding market is slowing. The hangover from Chinese New Year, high prices, quality of the selection and finance problems are still weighing on the market.

This week marked a huge milestone for Don. It was on 15^th March 1988 his 1^st catalogue was offered under the Lanoc Wool banner. The opening fleece lot in that catalogue was “BERRUMBUCKLE” a/c Tony Knight from Coonabarabran. His main line of 20.2 micron, 0.9, 75.7, no L/S test made 1450 cents (1915 cln) type 61. He sold his 2018 clip this week, with a top price of 1890 cents for 17.5 micron hogget wool. He told us that 1 tonne of “single super” fertiliser cost 7.5 fat lambs (today it’s about 3 fat lambs), shearing was $0.88/sheep and a schooner cost $1.20 - those were the days!! Well done to both, a great association and achievement.

Ag Concepts Fwd Prices as at 16 March, 2018

Main Buyers (this week)

       WEEKLY MARKET REPORT

            Week Ending 9^th March, 2018

          AWEX Northern Micron Indices Comparison

BUYERS EXACT REVENGE!

As we forecast last report finance problems were on the horizon for buyers as the largest catalogue since mid January loomed. From the outset prices in all categories (bar XBs) came under pressure and retreated from the opening lot. By week’s end losses ranged from 10 to 50 cents for all microns out to 22s. The AWEX EMI gave up 52 cents to close at 1778 - the losses not as severe in US$ terms, back by 22 cents to 1393. The rising A$ to 78.3, up by 1.3% for the week, kept this figure from being any larger - this shift in FRX also contributing to the losses. Buyers extracted some revenge especially for high VM lots and high mid-break types, some of these up to 100 cents cheaper than last sale. Also on the “discount” radar is prem shorn fleece wool that measures < 70 mm. These 6 to 8 month shearings are becoming more popular but, if below the desired length, discounts come into play. Conversely, the low VM types (< 2% VM) with low mid-breaks were in high demand as their quotes looked solid from previous sales.

Skirtings also took their biggest hit for some time. The low VM lots < 3% lost 30/40 cents while the burrier types gave up 60 to 70 cents and more (up to 100 cents) for lots with excessive col/cott. Cardings continued to weaken as all types in this sector were 15 to 30 cents off the pace except for the odd LMS lot. XBs were the only sector to record any gains as 28 and finer gained up to 15 cents (their 5^th weekly rise in a row) while broader microns were in buyers’ favour.

A tough sale as FRX and finance problems came to a head to have the EMI record its largest weekly loss since the end of January. As noted earlier, it was the inferior types that held sway to push the indicators down, these wools now dominating catalogues as we see more and more drought affected wool hit the market with a big price gap between these types and the fewer better style lots bound to widen, hopefully the better style wools will increase in value and the inferior types hold but a fall in prices is the favoured prediction.

The ABARES Outlook Conference was held in Canberra this week and with it came their release of 5 year forecasts for agricultural industries. Predictions for the EMI are a steady increase to 2015c/kg by 2022/23 to see the clip worth $5.74b by this time and sheep numbers to grow to 83 million in the same period.  We sell 1^st on Wednesday next week, hopefully the market can steady.

Ag Concepts Fwd Prices as at 9 March, 2018

Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 2^nd March, 2018

AWEX Northern Micron Indices Comparison

NEW RECORDS SET, BUT FINANCE A PROBLEM

For the 2^nd sale in a row steady increases in the wool market were in play as the AWEX EMI added 10 cents-1830- to its previous level. The depreciation in the A$ by 2/3rds to 77.30 saw the EMI in US$ terms actually give up 5 cents to 1415. A 10 cent rise is good news, but there looks to be a few hidden stories behind the numbers. Sydney staged the final designated Super-fine sale of the season. Buyers, led by the Italian mills and to an extent forward and spot traders, chased the superior sub 18 micron types hard, theses indicators gained 20 to 55 cents with some lots up to 100 cents dearer. All microns broader than 18 had mixed fortunes, as 18.5s lost 10 cents, 19/20 lost 15 cents, and 21s unchanged with 22s up by 15 cents with the ever-increasing volume of high mid-break wools (>60) hitting the market getting hammered by 100 cents compared to lots with mid-breaks <60. After an aggressive opening day prices retreated on >18.5 to  see some losses recorded, maybe the larger national offering next week, 47,500 bales, up by 5% on earlier forecasts took the buying urgency out of the sale-rooms and for some buyers finance problems returned late on Thursday.

The skirting market also went in 2 directions as the best, finer (17 micron) low VM lots made good gains, up to 50 cents, while broader types over 5% VM with col/cott looked 20/30 cheaper. The carding market continued to soften after a dearer opening session, the MCI in Sydney fell 10 cents to 1339, LKS the main culprit giving up 30/35 cents while all other types remained solid. February has been a good month for the XB sector, 4 weeks of rises, this sale saw 28s and finer up by 10/25 cents, 30 micron the only negative, back by 10 cents.

Another positive sale as more records were broken. The EMI set a new daily record on Wednesday, 1834 and a new weekly high of 1830, after losing 4 cents on Thursday to eclipse January’s peak. 21s and 22s are at all-time highs in all 3 centres, 21s averaging 1935 and 22s at 1904, absolutely fantastic $$ for these microns. On the eastern seaboard new records were also set for 16.5, 19 and 20 microns. The table above illustrates just how big the increases have been over the past 12 months even the very volatile XB sector is ahead. Once again, the state of buyers finances reared its head late on the final day to be a factor for fall in the medium micron fleece wools particulary with high mid-breaks. The big  offering could test next weeks market as finances may not stretch through to the end the  sale, we sell mid-way on Thursday, fingers crossed.

                                                Ag Concepts Fwd Prices as at 23 February, 2018

Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 23rd February, 2018

AWEX Northern Micron Indices Comparison

CLOSING IN ON A NEW RECORD AGAIN

The fears of the Chinese New Years holiday adversely affecting the wool market were allayed as modest increases over the series had the AWEX EMI reverse last sales losses to record an 8 cent rise to 1820 to be within a whisker of Januarys all time high. As the FRX moved in favour of the A$ by over a cent to below 78 cents on Thursday, this caused the EMI to lose 17 cents in US$ terms to 1417 cents. All medium microns-18.5 to 22s and 16.5- benefitted most from the renewed buying activity (spurred on by the FRX) adding 20 to 50 cents to their previous values while 17 to 18s were 10/15 cents higher. One factor worth noting is the amount of high VM in fleece wools coming onto the market. FNF types now are just over 50% of the offering making these lots more desirable to buyers as they try to keep averaging 1% VM in their orders. 

Skirting’s had a mixed sale as finer low VM types - <18.5 micron and below 5% VM - bore the brunt of big losses, 50/70 cents while all other types held their ground. Cardings couldn’t maintain last sales modest rises. The 3 centres lost ground, Sydney by 12 cents and Melbourne/Fremantle by 28 and 29 cents. Locks were the biggest casualty, cheaper by 40 to 50 cents while all other types in this sector gave up 10 cents. For the 3^rd sale running XB’s edged higher. Increases ranged from 5 cents for the broader microns-28 to 32- to 15/25 cents for 26s and finer.

The activity and price pressure in trading wool and manufacturing for the past few years now has been ruled by the growing demand. With this price escalation comes finance pressure to be able to continually fund purchases, eg: a full container (108 bales) of merino fleece wool is costing over $300,000. The FRX rate are also playing a part and becomes more critical when demand and prompt business is not apparent or if exporters are reticent to book firm contract and buying is done on indents and in US$.

AWI CEO Stuart McCullough has written to all AWI share holders with the latest developments on WoolQ- previously “Wool Exchange Portal” inviting growers to register. Various functions will be delivered over the next 12 months, starting with an Electronic Speci. Some brokers already offer similar services as far as down-loading speci’s from their websites. AWEX is also developing their own version. With the solid market national quantities have grown to 44,500 bales for next week, up by 14% in 7 days, with all buyers back in full buying mode. We sell late on Wednesday with 959 on offer.     

                                                Ag Concepts Fwd Prices as at 23 February, 2018

Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 16^th February, 2018

AWEX Northern Micron Indices Comparison

HAPPY CHINESE NEW YEAR – HOPEFULLY!!

The few records that were set in the last series for the Sydney Indicator (1909) and most fleece indicators couldn’t be maintained as the AWEX EMI gave up just 6 cents to 1812. In US$ terms the numbers appreciated by 14 cents to 1437 due the AU$ rising by over 1 cent to 79.30 against the US$. All the damage was done in the fleece sector as all MPGs lost some of last sale’s big gains. The largest fall was 17.5s, peeling off by 60 cents with all others reducing by 25 to 40 cents bar 16.5 and 21s. Their losses were 15 cents with broader microns solid.

Skirtings had a reasonable sale as the finer micron, low VM types (< 18 & 5%) looked just in sellers’ favour with the burrier lots irregular to finish a touch cheaper - growers accepting these great levels with just 14 bales unsold. After last sale’s big lift XBs were still on the buyers’ radar to record modest gains of up to 15 cents except 30 micron back by 10 cents. Cardings also looked to be in good demand as all types were solid to 10 cents better for LKS with some LMS extreme.

Most buyers took stock of the rapid elevation of the market last week to be a bit more selective with their purchases. The appreciation in the AU$ put paid to any further advancements for merino fleece types, bar lots with exactly the right specs that were solid to dearer as these wools become scarcer and lots with higher VM and mid-breaks grow in numbers and are harder to place and are receiving increased discounts. For the 2^nd time since Christmas the EMI has peaked in the 1820s but unable to go any higher suggesting this may be the top level for the moment but the underlying demand factor is still outweighing supply. Latest data on retail sales of clothing in eight of the major wool consuming countries shows sales rose in 5 of those countries in 2017 from 2016. Also from the big 8 countries (US, UK, France, Italy, Germany, China, Japan & Sth Korea) consumer confidence is on the rise, at its highest level since 2000, a massive indicator that spending  will rise and clothing will be on consumers’ wish lists. As demand has increased wool exports from the 5 major exporting countries is up by 11% for the opening 6 months of this financial year, Chinese purchases are up by 16% for the same time with Italy, Czech Republic and UK to the good by 7 to 9%. As the Chinese New Year looms, price shifts should be minimal as local buyers and non Chinese mills set the pace.

Ag Concepts Fwd Prices as at 16 February, 2018

Main Buyers (this week)

WEEKLY MARKET REPORT

Week Ending 9^th February, 2018

AWEX Northern Micron Indices Comparison

WALL STREET CRASHES – WOOL MARKET RISES!

The market exploded into action this sale as futures trading early in the week indicated a rise in the market as they looked 20 to 40 cents higher than the last trades executed late on Friday. This author’s bold prediction of solid gains across the board were swamped as the opening days action saw sub 17.5 skyrocket by 100/120 cents as broader microns added 50 to 75 cents. The 2^nd day of sales saw subtle increases of 10 to 50 cents to see the AWEX EMI crash through the 1800 cent barrier for the third time since sales resumed (1818). The shift in US$ terms wasn’t as extreme (+24 to 1423) due to the favourable FRX, a 7 day decline of over 2.5 cents to 77.94 this morning. As is the case in a market like this discounts for COL, TDR and high mid-breaks shrunk and premiums for best top-making, spinners style and better types become larger as buyers focused completely on quantity. Just 52 bales of fleece were passed-in in Sydney, a clearance of 99.2%.

Skirtings were also swept up in the buying frenzy as gains of 50 to 120 cents were commonplace with the ultra-fine selection < 3% VM 150 cents to the good. Only 9 bales failed to sell - 99.6% sold!! Cardings reversed last series’ falls and went some way to recoup the collapse of 2 weeks ago. The MCI in Sydney leapt by 54 cents as the Melbourne and Fremantle indicators jumped by an average of 110 cents. The XB market continues to confuse all and sundry as it also posted large gains, 50 to 75 cents across all microns as 26s are now the only micron behind levels that were reached after the opening sale’s jump a month ago.

The 80 cent jump in the EMI is the biggest weekly increase in seven years and the opening day’s 70 cent rise was the largest daily increase also since January, 2011. At 1818 we are just 4 cents shy of the record set on Tuesday 16^th, January before the 5 sessions of losses. As it stands now 18s and finer and 20/21 micron are at record levels and 18.5 to 19.5s just a whisker from setting new records. The impetus for the accelerating market came on the back of a couple of reasons: new business was written and orders were to be filled promptly, the FRX depreciated against all our major wool buying countries and forecast volumes were not going to be enough to cover increasing demand. The long anticipated Wall St correction didn’t have any impact on the wool market. The national catalogue climbs back above 40,000 bales next week (43,000).

Ag Concepts Fwd Prices as at 9 February, 2018

Main Buyers (this week)