WEEKLY MARKET REPORT 

Week Ending 24th May, 2019

 AWEX Northern Micron Indices Comparison

MARKET FALLS SHARPLY BUT BOTTOM IS IN SIGHT!!

Further negative sentiment from buyers saw the market retreat even more as the AWEX EMI lost 60 cents to 1833 and 49 cents in US$ terms to 1261. These indicators are now 150 and 241 cents behind levels from this time last year, 7.5 and 16% lower with the A$ 9% less at 68.7 cents. The major decline in the market was on the opening day as sentiment steadied on the final day. All micron indicators fell sharply, 40 to 80 cents with the familiar pattern of better style, low VM and the odd non-mulesed lot selling at market rate or up to 50 cents clean better with the tender, burrier, low yielding types getting smashed by up to 200 cents.

Skirtings also bore the brunt of poor buyer sentiment as low   VM fine types fell 50 to 70 cents while burrier lots gave up 70/100 cents. Cardings weren’t immune from the falling market either as all types lost 20 to 60 cents. The shine has certainly come off the XB sector after its stellar run since January. 26 to 28 micron lost 100 cents while 30s and < 26 fell 50 cents. This equates to a 219 cent (14%) collapse for 28s over the past 2 sales.

All the problems that led to the market falling last week are still well and truly in place. The lingering trade dispute/tariff war between the US and China is the major factor contributing to the slowdown in the Chinese economy and a sudden dip in their consumer confidence is flowing through mills reluctant to purchase wool as price pressure is mounting from manufacturers and retailers that are struggling to move dearer stock of fabric, garments and yarn that is building up in volume. Costs have also become dearer at early stage processing with scouring costs escalating with more water needed to combat the dustier wools and higher wastage costs incurred.

In response to their economic slowdown the Chinese government has loosened monetary policy ie lowering interest rates on consumer debt (mortgages) and devaluing their currency (Renminbi) against the US$ which has fallen sharply since tariffs were raised to 25% making Chinese exports to the US cheaper.

The EMI has fallen 120 cents (6%) over the past 2 sales. Even with a favourable FRX rate, the A$ at its lowest point since the GFC and weekly offerings under 30,000 bales the market has suffered. Let’s hope the steadier market on Thursday is a signal that we’re at a level where new business has been written and prices ascend!!

Ag Concepts Fwd Prices as at 24 May, 2019

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 17th May, 2019

 AWEX Northern Micron Indices Comparison

MARKET FALLS. UNCERTAIN TIMES AHEAD!

The stalling market last sale turned into a full blown collapse this week as the fears that a lot of processors not being able to pass on the higher wool prices to downstream users finally caught up with growers. Manufacturers and retailers are seeing more and more resistance from consumers for the higher priced garments - this wool being purchased over a few peaks in the market that now were deemed as unsustainable through the pipeline. Adding to the sour sentiment is the ongoing trade tension and increased tariffs on Chinese goods exported to the USA. Demand has been lowered by current price structure and the trade war and weaker global growth. China buys 75-80% of our wool and consumes half of that with the USA - a big purchaser of tops, yarn and finished goods.

Losses were across the full spectrum as the EMI lost 59 cents to 1893, its lowest point for six months. All merino indicators lost 50 to 70 cents with the poorer style types up to 120 cents behind these new price levels with some lots 200 to 300 cents clean down from their original valuation. Skirtings lost 40 to 50 cents. Cardings also bore some savage losses. STN fell 70/110 cents, LKS 20 to 30 while CRT remained unchanged; the 3 centres averaged 44 cent falls. Crossbreds took some big hits also.  Most XBs have climbed by 50% since Christmas but this came to an abrupt halt this sale. Losses ranged from 110 to 145 cents in Melbourne for 26 and 28 microns (10% falls). The national pass-in rate escalated to 22%.

This week’s falls came as FRX rates favoured the A$, now 69.15 cents and small volumes are being offered. This does not always guarantee a rising market. The US/China trade dispute flared up this week as the US announced a 25% import duty to be imposed immediately on US$200 billion of products from China, up from 10%. Included is greasy and semi-processed wool, yarn, fabric and carpets but not wool clothing. China retaliated with its own 25% tariff targeted at agricultural products. News came through late last Friday on the lifting of the ban of South African wool exports to China. Scoured wool can be imported and greasy wool is subject to temperature conditions as the FMD dies over time dependent on the temp, the higher the temp the quicker it dies. Just 25,000 bales are on offer next week but, unfortunately, we may see more of the same.

Ag Concepts Fwd Prices as at 17 May, 2019

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 10th May, 2019

 AWEX Northern Micron Indices Comparison

MOMENTUM STALLS BUT FOR HOW LONG?

The week to week national catalogue was reduced by 24% to 32,800 bales. The FRX was in favour of the A$ that dropped to a 3 year low below 70 cents. Many buyers were reporting that processors need to purchase wool after orders had been placed and the short term forecast for quantities in the low 30,000 range should have augured well for a rising market?? Not necessarily as one of the 2 big buyers for China was still cautious in their purchasing patterns securing only 4% (down on their usual 10/15%) of the volume bought. Their absence and a “sit and wait” approach by most other exporters saw the market drift by 8 cents to 1952 and 13 cents to 1361 in US$ terms with most falls on the final day of sales. The indicators gave up 10 to 20 cents as good style types barely moved while dustier wools came off as much as 50 to 70 cents in some cases.

The skirting market split into two as < 17 micron lost 20/30 cents while all others were solid to sellers’ favour. Cardings had a steadier sale as the East Coast indicators were unchanged to a touch dearer while in Fremantle their MCI gave up 25 cents to have all 3 markets within 5 cents of each other (1089 to 1094). Crossbreds  had subtle rises, up to 10 to 15 cents that continued to create new records since reporting these microns began, 1976 (30 micron) and 1983 for 28s and 26s within 20 cents of their all time record set in June, 2018.

Key data was released this week on Australian wool exports’ destinations and value. The season to March has volume exported down by 12% (an obvious fall in production) but an increase in value of 3% indicating just how good the market is going. Countries to lose volume were: China back by 17%, Czech Republic 36%, Egypt &Taiwan 24% and Malaysia down by 41%. China’s value was just 1% lower with India and Italy + 14%, Czech Republic -21%. The big mover is Thailand, their volume up by a massive 167% on the previous season and value climbed by 145%, a sign that more and more processing plants are relocating from other parts of Asia to the lower wages/costs countries. 33,300 bales are rostered next week. We will offer 1072 on Thursday and, hopefully, all exporters are operating to full capacity to secure the dwindling volume on offer.

Ag Concepts Fwd Prices as at 10 May, 2019

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 3rd May, 2019

 AWEX Northern Micron Indices Comparison

MOMENTUM BUILDING!

Wool sales recommenced this week following the Easter/ANZAC day holidays. After the market’s solid performance at the Easter Show hopes were high that the market had finally bottomed out and recovery was under way. The few buyers that were pre-valuing last Friday reported a bit of business being written and some mills being caught short for wool to process and the depreciation of the FRX by 1.5 cents also assisting any thoughts of ramping up purchasing patterns. The opening session saw 80% of the fleece selection in the good/best topmaking style (4/5) to see increases of up to 30 cents that lasted through to the final lots on the closing day. The AWEX EMI increased by 17 cents to 1960 but, as the A$ strengthened, this saw the market retreat in US$ terms - back by 21 cents to 1376. Most increases came in the good/best topmaking style types with the ever growing volume of poorer style wools losing ground to their superior counterparts - the gap between the good and inferior types widening.

Skirtings also benefitted from the renewed support as all descriptions lifted by 15 to 25 cents. Cardings shock off the run of falls to average 15 cent rises across the 3 centres. Crossbreds continued on their record breaking run as most microns jumped by 10 to 65 cents. This has a good 28 micron fleece type making 850 to 950 cents greasy and 26s over 1000 cents - incredible money!!

Talk of the market rising was spot on. Despite the national volume lifting to 43,000 bales (due to the 1 week recess) the extra wool was well absorbed by the buyers even with the absence of 2 of China’s largest indent buyers. Diminishing quantities over the next 3 sales (averaging 32,000 bales/week), the favourable FRX and fresh business being written all augurs well for a solid to dearer market for the immediate future.    

As is the case at the end of every month, latest AWTA figures were released. They showed a sharp decline in wool tested this April compared to 12 months ago 10%. The progressive total for the season was the same coming in at 10% less as offerings are just shy of 200,000 bales less than last season to date. The national catalogue drops back to 33,000 bales next week. If the Chinese indent buyers re-enter the market, price rises could be in the range of what was discussed earlier this week on the showfloor. Hope you are all getting the rain. 

Ag Concepts Fwd Prices as at 3 May, 2019

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 18th April, 2019

 AWEX Northern Micron Indices Comparison

MARKET FINALLY SETTLES!

The wool sale was held at the Royal Easter Show this week and had an overall positive tone to finish this run of sales before the 1 week recess for Easter and ANZAC Day. The AWEX EMI posted a 7 cent increase due mainly to Melbourne’s momentum, up 11 cents, compared to the 1 cent rise in Sydney.  The Sydney market opened on a solid note only to see sub 18 micron fade late in the final session to end the sale 5 to 15 cents cheaper and broader types either side of unchanged by 5 cents. Again buying strategies were a mirror image of previous sales - good types with the right specs were in hot demand as the vast quantity of poorer types were cheaper dragging the indicators lower.

Skirtings made little inroads into their run of falls over the past month as the best style lots lifted by 10/20 cents while all other types were firm. The carding market continued to fall with LKS losing 15 to 30 cents as all other descriptions remained unchanged. The appetite for XB wool seems insatiable at the moment as more records were set for 28/30 microns - rises ranged from 20 to 40 cents.

The market finally put the brakes on the long run of falls, 7 weeks and 91 cents, the longest falling run since late 2003. While this run of falls is disappointing, it was preceded by an 8 week run of increases that started in the final sale of 2018 and the gain was 178 cents, so still an indicator that is 87 cents to the good since December.

More news to come out of the IWTO Conference: Giovanni Schneider (MD of the Schneider Group) gave an update of the wool textile industry in Italy. Wool makes up just 1% of global consumption of fibres. Italy accounted for 11% of fibre used in their textile industry (men’s knitwear). Conditions in the worsted weaving business were difficult with manufacturers and retailers holding excess stocks of suits and a major challenge for the industry worldwide was the ever increasing demand from consumers for sustainable products. Another presentation on the British wool market highlighted the low prices for > 32 micron wool which are now very competitive compared to nylon. Brexit would not affect the price of wool but the British Wool Marketing Board has started a new marketing campaign to lift grower returns. Wool sales recommence on 1^st May. 

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 12th April, 2019

 AWEX Northern Micron Indices Comparison

A HAPPY EASTER SHOW SALE!!

Once again the wool market was in a virtual holding pattern as the AWEX EMI slipped by another 7 cents to 1936. Small decreases were the order of the day in the fleece sector as 18.5 and broader finished in buyers’ favour (-5) as 18s and finer gave up 10 to 15 cents. The falls in the other 2 centres were heavier: Melbourne’s losses ranged from 5 to 45 cents while Fremantle’s fleece indicators fell 25 to 40 cents as the inferior types bore the brunt of the negative buyer tone with the better style wools with good specs holding their ground - this being the purchasing pattern for a number of sales now.

Skirtings had a tough opening day as losses ranged from 20 to 50 cents depending on VM, style and length but held these levels in the final session. Cardings had a less tumultuous sale than the previous few series as just LKS gave up another 10/15 cents. All 3 MCIs are now within 4 cents of each other, 1096 to 1100. Crossbreds again were the star of the show as increases ranged from 25 to 65 cents.

The 88^th IWTO conference was held this week in Venice, Italy with the theme of “Wool in Excellence” as 300 delegates were in attendance. Italy is home to the world’s best textiles even though they purchase just 5% of our clip when it is processed into garments and textiles, turn over is more in value than the entire Australian wool clip. Constant discussion also centred on traceability and sustainability with many references to mulesing in between. The big message to take home is the National Wool Declaration and its critical importance and the need to have 100% of wool declared. AWI (Don) presented a short film on the drought that captured everyone’s attention and you could’ve heard a pin drop. This film featured 3 of our clients and how they are managing their sheep and country and was very much appreciated by the non Australian audience who have been hearing so much about the drought but had no visual idea of its severity on the land, livestock and people and the shrinking supply of wool. The Macwool Facebook page has had over 37,000 views of the film to date. To have a look search “Australian wool supply continues despite drought” on Facebook or YouTube.

Wool sales move to the Easter Show next week before the 1 week recess, let’s hope the market can improve.

Ag Concepts Fwd Prices as at 12 April, 2019

WEEKLY MARKET REPORT 

Week Ending 5th April, 2019

 AWEX Northern Micron Indices Comparison

SAME OLD, SAME OLD!!

The pattern of the last series kept going this sale as a minute fall of 4 cents for the AWEX EMI to 1943 was the end result. This was the 6^th sale in a row that saw a negative tone, the longest downward spiral (84 cents) since September 2012. The FRX was generally stable and has been trading in the range of 70.50 to 71.50 for 8 weeks. The MPGs had small losses, 17 micron and finer in buyers’ favour and broader than this lost 10 to 15 cents. As has been the case for several sales now fine, dusty, tender types bore the brunt of the falls while the good spec wools were rock solid. The volume of “best topmaking” fleece types was only 19% of the 21,500 bales on offer nationally with this figure down to 27% year to date compared to 43% the previous season illustrating just how much the drought is affecting the quality of the offering especially on the eastern seaboard.   

Skirtings also continued their cheaper trend as, like the fleece sector, only the very best fine micron, low VM types remained unchanged as the burrier, broader lots were 20 to 40 cheaper. Cardings fell again as the MCI in Sydney has given up 137 cents in the last 3 sales (1238 to 1101) as losses ranged from 20 to 60 cents for all descriptions in this sector. The only shining light was the Crossbred sector. Its stellar run since Christmas carried most microns to new record levels again adding 10 to 20 cents. From 25 to 32 microns increases have ranged from 185 to 350 cents since sale recommenced in January.

Talk of the market bottoming out over the past fortnight is yet to come to fruition. Exporters are still to find a comfortable level to trade the huge volume of drought affected wool that has and will continue to hit the market for a long time yet. While the merino types struggle XBs remain the flovour of the month as the above-mentioned figures show as more and more blending takes place between the 2 breeds as a means to cheapen up the final product. March testing figures from AWTA show little change in volumes as 3.7% less wool was tested this March compared to 2018. The progressive total for weight tested this season compared to the previous is 10.3% less - down from the June to December figure of 12%. If this status quo remains in play till June, 2019, this will give us 323mkg for the season which is well above the 308/312mkg estimate of last September. Export weight is tipped to be 2.45% less than last season as the average clip yield has fallen from 65 to 63% due obviously to the worsening quality of the clip as less clean kgs are exported. Well done to those clients who were lucky enough to be under last Friday’s storms, 65 to 110mm. Hopefully the next round of rain is more widespread and here soon. Market must be close to bottoming out soon, next week maybe???

 WEEKLY MARKET REPORT 

Week Ending 29th March, 2019

 AWEX Northern Micron Indices Comparison

A TALE OF TWO SALES!!

Week 39 saw 37,400 bales go to auction, 5700 less than last week. Unfortunately there was another decline in the Australian wool market (even with the 7.5% drop in supply) which saw 11.8% passed in. The AWEX EMI came back for the fifth consecutive week closing at 1947, a decrease of 16. There were considerable discounts once again this week, especially on the lower yielding wools, under 60%, which made up 30% of the merino fleece nationally by week. A report from AWEX explains that this week was the highest percent of low yielding wools since the 2009 drought. This is definitely a driving factor at the moment as lower yields mean extra processing, extra cost and more chance of damaged valuable fibre. As we look into the future, even if we get this rain that has confidently been predicted this weekend, (all fingers crossed) buyers and processors realise there is going to be a lot more of these types of wool coming through the system for a good length of time yet. As quoted by AWI, “With most of our wool destined for export in the greasy form, the low yield means far less clean kgs are able to be placed into shipping parcels/containers. Container shipment to China is much cheaper than all other destinations so decreased shipping of clean kgs is problematic but relatively negligible in the big cost/picture but with the European and Indian shipping costs ranging from 3 to 5 times higher, the lower yields either take competition away or depress prices due to conversion to clean kg.” Another factor included in the decreasing value of our wool is the constant flow of high mid-break wools. This week saw 76.8% of the Australian merino fleece under 40 nkt. Any better style wools with low VM, sound and higher yields are definitely making a premium in the merino fleece market which is still strong.

Merino skirtings had another solid week. Buyers seemed enthusiastic as the auction kicked off and left the skirtings generally unchanged, still helping the average for woolgrowers. The downside for the room 2 wools was the Cardings giving up 30 - 42c nationwide but still closing at an average of 1113c/kg.

Definitely on the positive side once again the XBs have added to the indicators. Very strong buyer support has helped the XBs rise by 15 to 20 cents with the broader 32 microns taking the biggest leap.

Next week sees us taking 814 bales to the auction. Let’s hope the market heads in a positive direction and see the EMI break back through the 2000 mark!

            Ag Concepts Fwd Prices as at 29 March 2019               

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 22nd March, 2019

 AWEX Northern Micron Indices Comparison

CROSSBREDS SOLID - MERINOS FALL!

Another week and more falls for the wool market. For the 4^th sale in a row the market was in retreat as all of the advances of S34 (59 cents) amidst the SA foot and mouth outbreak have been eroded as the AWEX EMI lost another 16 cents to add to the 48 cent losses for the 3 previous sales. The only sector to escape any losses was XBs. The ascending A$, peaking at 71.5 cents, a lift of 1.22% coupled with the ongoing poor selection gave buyers enough ammunition to let the market drift as 18 micron and broader gave up 10/15 cents while < 18s fell by 25 cents with only the very best style fleece wools with high nk/t readings and low mid-breaks escaping any discounts. The fleece offering that came under a style 6 or 7 (average to inferior topmaking styles) made up 15% of the volume, the highest weekly level since June 2010 as the grip of drought seems to tighten up.

Most room 2 types fared worse than their merino fleece counterparts. Skirtings took hits of 30/50 cents for the low VM lots (<2%) with burrier, poorer style types giving back 80 cents. Cardings also took a major hit as LKS/STN lost 40 to 70 cents while STN collapsed by 10 to 120 cents. As mentioned earlier, the XB sector was the only one to go through the sale unscathed as most microns were solid to 20 cents dearer.

All the talk on the showfloor centres around the selection and how poor it is with no real improvement in the short term even if the drought were to break now. Some fleece lines are yielding below 50% with these becoming an issue in scouring as water replacement frequency increases and sludge disposal costs escalate. There are no issues further down the processing line if scouring is effective as topmakers can use these wools and take advantage of the price discounts as the finished product is still suitable for worsted yarn manufactures.

National volumes look to have stagnated around the 40,000 bale/week mark as many growers shear and offload sheep to escape what could be another tough winter as low finances and ability to source supplement feed is forcing growers into this dire situation of selling ewes. Quantities are expected to decrease rapidly after Easter. The market looks to be close to the bottom of this price cycle according to some buyers. Let’s hope so and pray that “Trevor & Veronica” can get together and deliver what so many desperately need - a massive rain event!!

            Ag Concepts Fwd Prices as at 22 March 2019               

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 15th March, 2019

 AWEX Northern Micron Indices Comparison

UNDER THE WEIGHT OF DUST!

It was another tough week as the EMI slipped for the third week in a row under the weight of an increasing catalogue of drought-affected dusty wools and back under the magical 2000 cent mark to finish 29 cents lower at 1979. The national average yield on merino fleece this week was 63.6%, the lowest in ten years.

Over the course of the week buyers continually adjusted downwards their limits on the low yielding types as they struggled to average them into their orders. On the other hand, the few well-measured lines for both yield and tensile strength saw very good competition and finished the week not far below the previous week. It seems this trend will continue for the foreseeable future and now is certainly the time to be pulling dusty backs out of fleeces to give the remainder a fighting chance. What is also set to continue will be the downward pressure on the sub 19 micron sector and we now see the 17 micron indices 186 cents below this time last year even though the EMI is 228 cents above last year’s level. We predict the gap to narrow over the coming months with an imbalance in offering squeezing the broader end and flooding the fine end.

The Foot and Mouth outbreak in South Africa could still be having an impact here but not positive. We did see a jump in the market three or four weeks back and some of that rise was attributable to the Chinese ban on SA wools. The downside is that there are exporters who have South African wool tied up in containers either at Chinese ports, on the water or still in SA awaiting a clearance, who also buy wool off us. These exporters (a couple of large ones) would be feeling a credit squeeze and this has the potential to impact our market here. South Africa produces about 50mkg per annum equivalent to about 14% of the Australian clip. The fall in production here this year will be close to the entire SA wool clip.

Next week a larger catalogue of 44,000 bales will be offered in three centres with Macwool to offer 760 bales on Wednesday. I think you might have gathered by now we expect a similar trend for next week.

                  Ag Concepts Fwd Prices as at 15 March 2019               

Main Buyers (This Week)