WEEKLY MARKET REPORT

Week Ending 11th June, 2021

 AWEX Northern Micron Indices Comparison

CLOSING IN ON 1400!!

The impetus that the wool market has experienced over the past few sales kept going this series to have the AWEX EMI closing in on the 1400 cent mark (1393).  With the good rises comes many questions: Is underlying demand on the increase as northern hemisphere demand ramps up and consumers have more freedom to move around and spend money? Have finer wools peaked? When will the XB market improve and can the extra supply be absorbed by the market? The AWEX EMI added 50 cents (3.7%) to its value to go to 1393, the biggest weekly gain since January and a level not seen since March 2020. The jump was almost as good in US$ terms with a 38 cent lift to 1078 as the FRX was again stable at 77.40 cents. All 4 sectors of the market (Merino FLC, Skirtings, Oddments and Crossbreds) rose for the first time since January. The national pass-in rate fell to just 4%. The largest gains were in the superfine and broader MPGs (< 18 and 19.5/20 micron) rising by 70 to 100 cents with all other microns 45 to 65 cents better as just 95 bales of fleece wool were not sold in Sydney to clear 98.7%. Skirtings also gained some good traction as emphasis on < 18 micron with < 2.5% VM lifted by 30 to 80 cents with all other types increasing by 40 to 60 cents. Cardings saw double digit gains as both centres’ MCIs leapt by 28 cents with all types in this sector jumping by 20 to 70 cents. The crossbred sector saw its biggest gains since late February with rises of 20 to 30 cents.

Pressure looked to be on buyers and exporters from the opening lot as the quantity reduced to 36,300 bales - the smallest weekly selection since late November, 2020, with just the 2 East Coast centres operating. Bidding was fierce on almost all types as lack of volume and enquiry lifting resulted in the market only going one way with Chinese indent orders and local exporters selling to Chinese mills leading to the ascendency in prices. In a positive for the XB market Europe’s largest topmaker dominated this sector. The current level of 1078 in US$ terms is the first time since the pandemic sent the market into a downward spiral that we are at pre Covid-19 levels (January 2020). The values are as good as any time in the past 2 years with only 5 weeks since July 2019 having been higher than this series’ point.

It may be convenient (and a little simplistic) to point out the Covid-19 vaccination rates in the USA compared to other markets and suggest getting people back into wearing woolen suits may be linked. There is a big drive by leaders and mayors of most US cities to entice people back to their CBDs and shop there for all types of products including clothing which would be welcome news for worsted fabric manufacturers. It would be encouraging to see this directive happen across cities in Europe and Britain with lockdown restrictions hopefully to be lifted towards the end of June. Fremantle comes back onto the selling roster next week to push the national catalogue to 45,000 bales.

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 4th June, 2021

 AWEX Northern Micron Indices Comparison

HIGHEST POINT OF THE YEAR!

The market kept up its momentum for the third sale in a row as most types across nearly all MPGs added to their values. The only negative movements were in the 20/21 micron fleece types in Sydney which finished in buyers’ favour due to higher levels of VM in these wools. After a few weeks of single figure gains the AWEX EMI rose by 23 cents to 1343 eclipsing the 1342 cent mark of late April to sit at its highest point this year. The gain was just as impressive in US$ terms with an 18 cent lift to 1040 as the FRX barely moved for the week to stay at 77.5 cents. 19.5 micron and finer gained 20 to 60 cents with 20s and coarser in buyers’ favour by up to 5 cents. It was noticeable that discounts for tender, low yield and high mid-break lots were reduced as buyers scrambled for the so-called “cheaper lots”. Growers were quite happy with the ascendency in prices as just 72 bales of fleece were passed-in in Sydney.  Skirtings had even more impressive rises with < 18 micron under 2.5% VM jumping by 60 to 80 cents with broader types to 19 micron 20/30 cents higher with all other broader and burrier types solid to sellers’ favour. Cardings kept the rising momentum going with gains across the board in this sector to the tune of 40 to 60 cents. All 3 centres’ MCIs are now back above 900 cents to average 911. After 4 weeks of losses in a row, crossbreds also finished in the positive with most types up by 5 to 15 cents. The pass-in rate fell to 7.4% - the highest clearance rate for 5 weeks.

Finer microns (< 19.5) are enjoying their day in the sun at the moment. With less volume of these types and lower cashmere supply in Mongolia and Iran and supply chain disruptions much of the high quality knitwear for the up and coming season will contain more merino than cashmere - a good outcome for fine wool growers with wool to sell over the next few months. As each week goes by more enquiry is coming from Japan, India and Europe putting more competition into the market. Medium wools (20/22 micron), however, are struggling to keep up with their finer micron counterparts’ gains with VM over 2% being punished unfairly as this is not high level VM nor difficult to process compared to FNF wools or types up to 2%. Many mills in China will not sway from their generic government types that specify 1.8% VM. The mills that buy outside these specs can virtually pick and choose what they want to buy at great value. There has been new business written for medium merino types so, hopefully, this can benefit the 20 micron and broader market. Topmakers from China and Europe took on the local traders to try to build up some inventory with big manufacturers keen to secure quantity as supply throughout June should average mid to high 30,000s as Fremantle do not sell next week or in sale 52.  All the showfloor talk is for a very solid market with 38,600 bales on offer on the East Coast.

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 28th May, 2021

 AWEX Northern Micron Indices Comparison

AWEX INDEX	This Week S48/20	This Week M48/20	Last Sale S47/20	Sydney Change	Last Year Sydney	Sydney Yearly Change
17	2330	2380n	2288	+42	1653	+677
18	1965	1963	1931	+34	1498	+463
19	1640	1633	1622	+18	1363	+227
20	1350	1336	1364	-14	1296	+54
21	1269n	1234	1299n	-30	1275n	-6
26	-	729n	744 (M)	-15 (M)	801 (M)	-72 (M)
28	448n	455	458n	-10	600n	-152
MC	913n	898n	890n	+23	843n	+70

FINE WOOLS UP, BROAD WOOLS DOWN!

The market edged higher again this series (+5 cents) but the split in prices that comes into effect around the 19.5 micron mark is becoming more evident. The natural shift to coarser microns due to the good seasonal conditions is having a negative impact on fleece wools broader than 19/20 micron. Add the extra VM into the mix and these types are coming under more and more price pressure as the volume of broader/burrier fleece types comes onto the market increases. It’s the opposite story for < 19 micron wools as they continue to increase in value as their volume shrinks.

The AWEX EMI put on 5 cents to 1320 but gave back 2 cents to 1022 in US$ terms as the FRX dropped by 0.5% to 77.45 cents. The pass-in rate edged higher by 1% to 11% as some growers were caught by the sudden and, in some cases, very large falls for broader types. 18.5/19 micron rose by 20 cents with 18s and finer gaining 35 to 55 cents. Skirtings followed a similar pattern to last sale with < 18 micron and < 2.5% VM 20 to 40 cents dearer with all others solid. Cardings followed their combing counterparts with all types in this sector 15 to 30 cents to the good to see the MCI in Sydney rise by 23 cents to 913. Crossbreds continue to follow their cheapening pattern to fall by around 10 cents - their 4^th consecutive week of falls with shearing costs now more than the return for some crossbred clips.

The buying strategies for merino fleece wools are worlds apart. Aggressive for sub-19 micron types but very cautious for broader wools. Many of these coarser types contain well above the 1% VM average that most orders require in China and the lack of FNF types is making it almost impossible to put them into orders that need to average below the 1% level. These higher VM lots > 20 micron took a beating this sale. Losses ranged between 100 to 150 cents clean (60 to 100 greasy) but the FNF to 2%VM types looked to be in line to where the MPGs finished.

As we have said in past reports, enquiry from outside of China is slowly on the improve as our critical Northern Hemisphere markets slowly emerge from their Covid-19 induced recessions and consumer spending gains momentum as lockdowns and restriction are lifted. More consumers are returning to “life as we knew it” which means working normally, catching up with people, going out and shopping. The short term outlook for prices to strengthen is coming from manufacturers in Europe and India with an increased level of enquiry that is being fielded by buyers at the moment. Italy, India (even with the pandemic almost uncontrollable) and the Chez Republic seem to be leading the charge for a price stable period or even a lift leading to the end of the season. Quantities will fall slightly to just 41,000 bales next week which should keep all buyers interested. We open the sale on Tuesday with 1,370 bales.

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 21st May, 2021

 AWEX Northern Micron Indices Comparison

MARKET STAYS IN A HOLDING PATTERN!

Showfloor talk of a slightly dearer market was spot on as the market managed to claw back some of the previous fortnight’s losses. The firming market in Melbourne last Thursday indicated that a bit of renewed activity and enquiry was forthcoming. The reduced national catalogue by 8,000 bales (to 41,850) played into growers’ hands with the stronger A$ not adversely impacting on buyers purchasing strategies as the FRX rose by 2/3rds of a cent to 77.90 and climbing above 78 cents briefly on Wednesday night. By the numbers, the AWEX EMI added 9 cents to 1315 and 15 cents to 1023 in US$ terms. The gains for merino fleece types was even from super-fine to medium microns, 25 to 35 cents across the board. Low VM (< 2.5%) skirtings led the price recovery in Room 2 as they finished 20/40 cents higher with all other types unchanged for the week. Cardings also recovered some losses from the 2 previous series as all types were up to 20 cents to the good bar some burry LKS in the 18/19 micron range that lost 10 to 20 cents. The crossbred was erratic but the majority of types continued on their worsening trend. Lower style lots fell by another 20 to 40 cents with the odd well-prepared lot, regardless of type, exceeding valuations, in some cases by 50/100 cents making it almost impossible to value and predict with some types either totally neglected or making well above the valuation. On our day 35% of the crossbred offering was passed-in. The overall pass-in rate fell to 10%.

The continuing smaller volume of FNF (< 1% VM) fleece types saw these wools come under the most pressure and benefited from the rising market more than the higher VM lots. Fleece wool in Fremantle in some cases outperformed their Eastern states counterparts because they are offering more of these types with the good seasonal conditions here putting more VM into this year’s clip on the east coast. For 19.5 to 18 micron the MPGs in Fremantle are just ahead of the prices in Sydney and Melbourne. Chinese top-makers and indent buyers dominated all buying lists with good support from local traders and the largest European top-maker who looks to be ramping up their buying patterns with 2 exporters commenting that enquiry from Europe is on the increase.

Although auction volumes are higher than in past years the absence of South African wool sales and Fremantle going into fortnightly sales in June will keep a lid on quantity overload for the short term. The recent spike in prices was due to some uniform orders being executed by the Chinese government with more to come but the timing still an unknown. Chinese retailers are reporting a surge in consumption of Merino and Merino blend garments but many mills are still keen to export tops or early stage semi-processed garments to their long standing offshore clients. When this ramps up to pre Covid-19 levels is the million $ question. 46,000 bales are on offer next week, no change we hope!

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 14th May, 2021

 AWEX Northern Micron Indices Comparison

MARKET STAYS ABOVE 1300 - JUST!

The market didn’t pass the test of too much volume this sale as more losses were recorded. The weight of an anticipated 54,700 bales was a bridge too far for exporters but the market fell less than the expected losses that were widely predicted. Over the past fortnight the AWEX EMI has retreated by 36 cents after the previous 2 sales saw a combined jump of 51 cents. The EMI still sits above 1300 cents at 1306 and at 1008 in US$ terms after falling by 11 cents. This series’ losses were more subtle than severe for the merino fleece types, 18.5 micron and coarser giving back up to 10 cents along with 17s while 17.5/18 fell by 15 to 30 cents with the superfine microns in sellers’ favour. Low VM(< 3%) skirtings looked solid by week’s end with lower types that had higher VM,  cott and colour off the pace by 10 to 20 cents. Cardings continued on their downward run from last week to have all types give back 10 to 30 cents as the 2 East Coast MCIs lost 20 cents to fall below 900. Crossbreds also cheapened up this sale to the tune of 10 to 40 cents depending on micron and centre. Despite the market slightly cheaper, the pass-in rate fell by 3% to 12% as the FRX stayed relatively stable at 77.20 cents from late last week but was peaking at 78.50 early in the week as sales were being held then fell 2% on Wednesday night.

The volume movements of this week’s catalogue were certainly a talking point on the showfloor. After a 40% increase by last Friday from the week before then a drop of 2400 bales by Monday to 52,000 then the usual withdrawal rate of between 5 and 8% this left 49,000 to be offered and, with 13% passed in, just 43,600 bales actually sold to give us a 21% difference in predicted offering to what was actually sold. Why the Chinese have to get into a panic when big volumes are forecast then never come to fruition is one of the great mysteries of the wool trade!! This coming sale’s national catalogue is 46,000 bales so it will be highly likely that the sold figure by this time next week won’t reach 40,000 with most experts predicting a solid to slightly dearer market.

Even though demand is fickle at the moment the market is faring well despite the unusually high weekly offerings at this time of the year with financial restraints still well in play with the ongoing logistical problems and the profile of the selection becoming difficult to place in some orders. With most growers benefitting from a good season, this has pushed microns out by 1 to 1.5 microns broader but lifted yields by 10 to 15%, while the % of VM has and will continue to rise as we go into winter and, with the market over 50% better than the low point of 858 in September, there are still some drought-affected wools still making their way into the market which is proving difficult to place in some orders.

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Main Buyers (This Week)

WEEKLY MARKET REPORT

Week Ending 7th May, 2021

 AWEX Northern Micron Indices Comparison

MARKET TO HOLD ABOVE 1300??

The good fortnight the market had with a combined 51 cent gain came to a sudden stop this week with a 23 cent retreat in the AWEX EMI to 1319. With 48,000 bales on offer and plenty of enquiry, all the showfloor talk was for a very solid to dearer market but by Monday afternoon it was evident that sentiment had changed as forecast rostered volumes for next week’s sale ballooned from 38,600 to 54,700 in a week, an increase of 41% with estimates for the following sale expanding by 22% (32,700 to 40,155). It would seem that early figures released for these 2 sales were grossly underestimated in the first instance giving buyers and exporters a false reading of up and coming volumes. Added to this was the extra volume of wool put into the next few sales as the market rose. Some of this wool was harder to place with higher VM and low yielding types held over from the drought. These wools were cheaper from the get-go and dragged the market lower.

As we stated earlier, the market shed 23 cents to 1319 with a similar fall of 26 cents in US$ terms to 1019. The fall in the FRX to 77.25 (0.65) was not enough to stave off the falling market. All fleece microns suffered falls (bar 21s and broader) ranging from 20 to 40 cents as all types came under pressure. Skirtings fell by similar amounts, 20/40 cents with low VM types (< 2%) with good AM results quoted about 10 to 20 cents back. Cardings recorded similar falls to their combing counterparts of 20 to 30 cents with low VM types less affected. All centres’ MCIs still remain above 900 averaging 912 cents. Crossbreds also lost ground to see most microns (26 to 32) give back 15 to 30 cents. The pass-in rate more than doubled to 15% up by 9% on the previous sale.

Apart from sentiment and quantity variation influencing the market, logistical problems and buyer finances are still at the forefront of exporters’ dramas. Their ability to plan buying strategies and put those plans into action week to week is somewhat of a guessing game as wool deliveries are still 2/4 weeks delayed into China and more to other destinations. The market has performed well and absorbed the larger volume on offer this season, over 104,000 extra bales offered to the trade when compared to the previous season with a market basically rising as demand picks up as the effects of Covid-19 slowly dissipate around the world. The latest testing figures released by AWTA make for some interesting reading. April figures show a 19% increase compared to April, 2020. Total weight tested season to date is up by 1% which equates to 264mkg tested compared to 261mkg last season due mainly to heavier wool cuts per sheep as a result of the better season and higher lambing % from last year. The largest offering since the opening sale of the year (54,700 bales) will test the market next week.

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 30th April, 2021

 AWEX Northern Micron Indices Comparison

LARGE QUANTITIES, RISING A$, NO WORRIES!!

With the anticipated big offering this week of over 50,000 bales some in the trade were fearful that the extra volume catalogued would be too much for buyers and exporters to handle. After last series’ good gains, especially for sub 19s, the rush to capture the rising market added 6,000 extra bales to the roster. The market started on a solid but tentative note in Sydney in the opening session with Melbourne adding double digit gains to almost all MPGs. Momentum built on the second day as gains ranged from 10 to 50 cents depending on centre and micron. By week’s end rises of 30 to 40 cents covered all merino fleece microns bar 21s which gained 15 cents. Skirtings followed their fleece counterparts to record 20/30 cent lifts on most types with < 18.5 micron and < 2.5% VM 35 to 50 cents to the good. Cardings also kept up last sale’s momentum as the MCI rose by 25 cents to 922. All types in this sector recorded gains of 10 to 40 cents. Crossbreds had an up and down sale to finish the series about 10 cents cheaper. The AWEX EMI jumped by 30 cents to 1342 (2.3%), its largest weekly gain since mid February. In US$ terms the rise was just as impressive, 34 cents to 1045 (3.35%) as the FRX strengthened by 1 cent to 78 cents. Growers were happy with the rising market as the pass-in rate was the lowest since the end of January at 6.4%

Is this the start of the recovery everyone has been waiting for?? Signs are promising that the post Covid-19 global economy is growing but a full recovery is some time off. Signs for a solid market next week are good as Melbourne and Fremantle finished on a dearer note on Thursday. 48,000 bales are on offer.

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 23rd April, 2021

 AWEX Northern Micron Indices Comparison

FINER WOOLS LEAD THE WAY

The solid finish to wool sales in Melbourne and Fremantle late in last week’s series gave hope that the market could reverse last week’s cheaper trend. All the talk on the showfloor was for a dearer market with emphasis on the sub 19 micron types with broader spec wools just holding their own or in buyers’ favour depending on how good or bad test results were. The market exploded into action from the opening lot with all Merino microns adding to their value regardless of micron, VM or mid-breaks with 17s in Sydney jumping 108 cents on the opening day. The market did steady in the final session as finer microns added to their values with broader types unable to hold the previous days increases to lose 10/15 cents. By week’s end 18.5 and finer added 70 to 130 cents with 19s and broader lifting by 10 to 50 cents. Skirtings also commenced the sale in a hurry with rises of 30/40 cents across the board with < 17.5 micron with < 2% VM 80 to 100 cents dearer. The final session saw the urgency come out of the sale room as 18 micron and coarser types give back 15 to 20 cents from the previous day. Cardings added money to their solid sale last week to average a 20 cent gain across the 3 centres with their MCIs now averaging 910 cents as all types in this sector were 20 to 50 cents higher. The crossbred sector had the quietest sale as quotes were in sellers’ favour for most types in this sector. The AWEX EMI added 21 cents to 1312 (16 cents in US$ terms) to 1011 as the FRX barely moved from 77 cents. Even with the rising market the pass-in rate was still on the high side at 10.7%.

Fine types continued their trend of recent months getting dearer while broader microns look to be in some sort of holding pattern with very little price change. As we have stated recently, with the good season pushing wool coarser by 1 to 1.5 micron, the volume of sub 19s is decreasing and broader micron wools are on the increase, thus the less volume in the finer sector of the market is pushing prices higher and the bigger volume and heavier VM levels of coarser types are causing buyers to struggle to place these wools despite steady enquiry and the stable FRX. China led the enquiry for new business with spatterings of new business written outside China with these few new containers immediately assisting the market. Of course the market is dependent on consumer demand with the easing of restrictions as vaccines get rolled out, encouraging more people to spend money which will be the key driver to lifting demand. Global economies will grow in 2021 but not as quickly as the IMF predicted as some countries vaccine rollouts are slower than anticipated and some countries experiencing more waves of Covid-19 such as India and Brazil. China, on the other hand, looks to be in recovery mode far more than other northern hemisphere countries. Their economic growth was 18% higher in the 1^st quarter of 2021 than in 2020 when their economy shrank by 6%. Industrial output for March was up by 14% and retail sales grew by a massive 43% from March 2020.  With the rising market national volumes have grown to 50,800 bales with some sectors expecting a slight downward price adjustment.

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 16th April, 2021

 AWEX Northern Micron Indices Comparison

SALES RESUME ON A SOFTER NOTE

The resumption to sales after the 1 week Easter recess didn’t go to plan as far as some growers were concerned. An estimated catalogue of 52,000 bales was forecast when rosters were released last week but the totals were reduced to just under 50,000 by Monday as both buyer and seller were preparing for the market to fall marginally. This was the scenario that played out during the course of the sale as the AWEX EMI gave up 9 cents to 1291. In US$ terms the market tracked the opposite way to add 7 cents to 996, this due to the ascending FRX to 77.15 (up by 1.5%). The market fell early in the week as most participants expected but a last day recovery in Melbourne gave hope that the market has bottomed out for the moment. Finer types seemed to be in high demand as 18s and finer lifted by 5 to 40 cents to continue the trend since early in the year with finer microns becoming more valuable as the volume of these decreases with the good season pushing microns out by 1 to 1.5 broader than last season. AWTA figures back this theory up. This season has seen 15% less wool tested finer than 18.5 micron than the previous season. The trend was cheaper for 18.5 and coarser with falls of 25 to 60 cents as wools in this micron range increased in quantity with the good season, especially 19.5 and broader with higher VM lots penalised more and more. Skirtings had an up and down sale to finish the series about square with selected < 17.5 micron types with < 2.5% VM up by about 20 cents. The ever increasing VM levels could be a hindrance to advancing prices as skirtings are becoming more cotted and heavier in colour making them harder to place in orders. Cardings also had a quiet sale to have most types unchanged for the week bar high VM LKS being quoted 10 cheaper. Crossbreds couldn’t maintain their pre-Easter levels with falls ranging from 5 to 20 cents. The national pass-in rate was higher at 14% as some growers resisted the falling market. 

The well earned recess was a good chance for everyone to catch their breath. It gave buyers and exporters a chance to refuel their exhausted bank accounts. The big wool exports expenditure for February/March shipments was the main reason for stress on exporters’ finances but things are on the improve with funds now coming back to Australia with the arrival of wool in China and the week’s recess relieving some of the logistics problems for the short term. Interesting to note that Chinese imports of wool were up 64% this past February compared to a year ago.

The anticipated large offering and the stronger FRX were the main reasons for this week’s fall. The final volume of wool offered was 12% down from the original forecast and, with passed-in and withdrawn wool adding up to over 16%, just 39,700 bales were actually to the trade. As finer wools get dearer and broader types cheapen, the gap between them grows. The difference was 756 cents from 17 to 21 micron in Melbourne a month ago, now it’s out to 927 cents (2172 to 1245). With the market’s recovery in Melbourne on Thursday, things look good for next week. We sold some passed-in lots from this week’s sale this morning for increases of 30/40 cents from their passed-in prices. We open proceedings on Tuesday with 760 bales on offer and a national catalogue of 45,500 bales.

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Main Buyers (This Week)