WEEKLY MARKET REPORT 

Week Ending 4th October, 2019

 AWEX Northern Micron Indices Comparison

DEMAND IS KING BUT VOLATILITY RULES!!

The market hit a brick wall this sale as demand almost completely dried up. The cheaper market in Fremantle last Thursday was the absolute indicator of things to come this sale as the volatility in the market continued as last series’ gains were completely wiped out when the AWEX EMI fell by 98 cents to 1511. All FLC indicators recorded triple figure losses, 120 to 145 cents. Most skirtings dropped by 80 to 110 cents bar the better style low VM types which gave up 60/80 cents. Crossbreds also suffered heavy losses - 80 to 100 cents while cardings were the only shining light to be firm to sellers’ favour. We were fortunate enough to open the sale on Wednesday and escaped most of the carnage with some NM lots 25 to 100 cents better than their indicators.

This degree of volatility has not been seen in the market according to wool buyers with 40+ years of experience. Over the past 9 weeks, since sales resumed, the EMI has lost 389 cents, regained 244 and this sale fell 98 cents. Volatility is running above 40% for 19 & 21 micron and in the last 10 years the EMI has moved either direction by more than 50 cents in a single day 19 times, with 9 since January and 7 in the past 9 sales. On two occasions has the EMI had a daily shift more than 100 cents, both in the last 6 weeks.

The shrinking volume is again front and centre with the latest release of testing figures from AWTA. September is back by 13.7% compared to last year and for the first quarter of the season the decline is 14% (55,000 bales) from last season. The total bales offered is worse, 81,500 (19.6%) less than last year so far - alarming figures.

More  Ram sales results: Allendale at Wellington cleared 78% with a top price of $3,500 to average $1320, other results from  Wellington: Mumblebone sold all but 2 rams from 200 offered to average $2905 to top out at $12,000 (2); and Boxleigh Park topped at $3,200 for a $1,490 average; Langdene at Dunedoo sold 87% to average $3,030 with a top price of $9,000; while Dunbogan 85% sold with a top of $2,600 to average $1265; at Peak Hill Westray/Genanegie cleared all 164 on offer to average $2,565 topping out at $16,000; and Cora Lynn averaged $1,645  with a top of $3,800 to clear 95%.

         Southern Aurora Fwd Prices as at 4th October, 2019       

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 27th September, 2019

 AWEX Northern Micron Indices Comparison

IS THIS ANOTHER PEAK??

The Nanjing Wool Conference that was held last weekend proved to be a success as plenty of business was written as all mills sold plenty of quantity to fill large fake fur orders. The market’s stunning rise two sales ago kept going this week as an opening day surge saw 19 micron and broader add 90/100 cents and finer types 35 to 60 cents with some superior types 50 to 200 cents higher. Skirtings also recorded rises beyond 100 cents as the low VM < 2.5% lifted by 100/130 cents while all others were 70 to 110 better. XBs posted gains of 30/50 cents while cardings enjoyed the renewed buyer sentiment as the 3 centres averaged a 64 cent jump as all types rose by 40 to 80 cents. The AWEX EMI rose by 67 cents to 1609, a 244 cent (63%) recovery over the past 3 weeks from the 389 cent fall in August.

Ram sales continue in earnest with good averages and clearance rates. Some more results include: Macquarie Dohne cleared 100% with a top of $6,000 to average $1,880; Gullendah at Baldry also had a top of $6,000 to average $1,970 and cleared 96%; Roseville Park also cleared 100% to average $3185 topping at $12,000; Towalba at Peak Hill sold 95% to average $1,775 with 2 rams selling for $5,000; Coddington Uardry also achieved a top of $5,000 to average $1,980 and clear 94%; Trynow at Goolma averaged $1,330 for a top price of $4,600; Calga Dohnes from Coonamble sold 91% to average $1,455 with a top of $3,600; Bella Lana at Wellington had a top of $4,550 to clear 90% and average $1,950. In the Riverina Poll Boonooke and Wanganella had a top price of $26,000 to average $3,675 and sold all but 1 of the 190 rams offered and Pooginook topped out at $6,500 to average $2,365 for all 237 rams sold.

AWI board elections will be held in November and all shareholders were sent documentation showing their voting entitlements at the AGM. There have been some discrepancies where the numbers of entitlements were wrong. If you have any queries we can email you a report showing the amount of wool tax for the past 3 years.

Most exporters thought this run on the market could last for a few sales but Fremantle’s fall in the market late yesterday (30 to 70 cents) could see the market give up some of this week’s gains.

       Ag Concepts Fwd Prices as at 27th September, 2019     

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 20th September, 2019

 AWEX Northern Micron Indices Comparison

WELL DONE SHARPY – A GREAT ACHIEVEMENT!!

A great milestone was achieved this week as Ian Sharp clocked up 50 years in the wool trade. It was on the 18^th September, 1969, that he commenced with Winchombe-Carson as a junior valuer then went to CPS then onto Elders in 1973 till 2011 when he joined Macwool. It is an achievement to be able to work for half a century but to work in the one industry for your whole career and witness how the wool industry has evolved over that time and the life-long friendships that he has forged is testament to the respect and high regard in which he is held in the wool industry. Well done and here’s to many more years in the trade.

On to the market: Things panned out as most people had hoped. After last week’s massive hikes that left Melbourne and Fremantle well ahead of Sydney as they forged higher on the final day of sales (as we only sold on the first day), to have the 3 centres’ prices aligned more closely this week was a good result. With our rise and Melbourne’s fall the EMI added 7 cents to 1542 and most microns rose here by 35 to 60 cents. In the south, < 18 lifted by 10 to 40 while > 18.5 lost 25 to 50 cents. Skirtings kept improving as all types jumped by 50 to 70 cents with cardings to the good by 30 to 40 cents. Crossbreds had a mixed sale as opening day losses were nearly cancelled out by a final day’s rally to have 28s and finer up to 30 dearer and broader types 20/30 cheaper.

We are in the peak season for ram sales with studs holding their sales through to the end of October. A few to report on from the past week include: Haddon Rig at Warren clearing 94% of their draft with a top of $6,500 to average $2410; Gullengamble at Yeoval sold 97% with 2 rams selling for $5,500 with an average of $2245; the newly formed Towonga stud at Peak Hill averaged $1910 with a top price of $4,500 to clear 84% at their opening sale; Parkdale at Dubbo had a top price of $3,500 to average $1,515; Weealla at Gilgandra sold all rams on offer to a top of$3,250 (2) to average $1,350; and Merryville at Boorowa sold 75% with 3 rams topping at $5,000 to average $2,125. Good results given the ongoing drought and the number of ewes to join far less than last year.

The Nanjing Wool Conference is currently being held in Shandong, China. The success or failure of this gathering will determine the immediate price direction of the market but one buyer reported selling 90% of this week’s purchases yesterday so next sale should be rock solid.

          Ag Concepts Fwd Prices as at 20th September, 2019       

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 13th September, 2019

 AWEX Northern Micron Indices Comparison

HISTORIC RISES BUT WHERE TO FROM HERE??

What an incredible week for the market as the recovery was nothing short of spectacular. After last sale’s stable market and signs of a level being found last Thursday, futures trading was pointing to a 30/40 cent lift and by Tuesday night predictions were in the 80 to 100 cent range. Both were wrong! The sale in Sydney was condensed to a one day sale due to lack of quantity with gains of 70 to 90 cents for < 18 micron and the broader types 130 to 185 higher. The AWEX EMI added 170 cents to 1535 - the largest weekly gain on record - with the 130 climb on Wednesday the biggest daily rise of all time. Skirtings added 80 to 100, XBs rose 65 to 100 and cardings put on 50 to 100 cents. Despite this steep rise for all sectors, the pass-in rate was 6.2%

After loosing 389 cents (24.5%) since the resumption of sales over the past 5 weeks the market made a stunning comeback to gain 170 cents (12.2%) in one week to wipe out 44% of the losses.  Buyers were frantic to secure quantity as discounts shrank and premiums for better types rose to extreme levels. As one buyer said, “Exporters stopped selling the market down” as the volume of wool on offer compared to the wool actually sold over the past 5 sales had declined by 40/50% due to the high passed-in rates and withdrawn lots. Another factor was the sudden rush of woolen clothing imported to the US from China before last week’s additional 15% import duty came into effect as US retailers tried to beat the 1^st September deadline. For June and July the year-on-year % of wool imports rose by 30%. This major increase in exported clothing may have left some manufacturers short on stock in China and with small offerings to pick from, panic looks to have set in. Also adding to the good news was the softening stance between the US and China over tariffs and agreeing to a resolution may not be just a dream but reality sooner rather than later which can only help consumer confidence north of the equator.

Kerin Poll held their ram sale this week with a total clearance of 450 rams to average $2500 topping out at $10,000. At the feature sale in Adelaide 2 rams were bought by syndicates for $100,000 (poll) and $72,500 (horn). These results augur well for the stud selling season despite the on-going drought and less ewes to join and maybe not as many rams needed for upcoming joinings. After the overdone falls in August and this sale’s correction anything is possible in this current volatile market. Who knows what for next week??

Ag Concepts Fwd Prices as at 13 September, 2019       

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 6th September, 2019

 AWEX Northern Micron Indices Comparison

IS THIS THE BOTTOM??

This week’s market started off poorly but rebounded in the final session to give a glimmer of hope that the market may have finally bottomed out. By week’s end the AWEX EMI lost just 10 cents to 1365 with a slight lift in US$ terms (6 cents) to 931. All MPGs fell ranging from 5 to 20 cents with the very odd best style Italian lot fetching 30 to 60 cents higher than their indicators. The renewed buyer interest flowed through to Room 2 as skirtings lifted by 30/50 cents, cardings added 30 to 60 cents and XBs looked up to 10 cents dearer.

Finally the market came off the descending elevator to find the stairs. After a horror August which saw the market shed 379 cents (23.8%), the largest monthly % decline in 28 years, the market recorded its first daily rise since Sale 2 on Thursday to hopefully stop the rot. The EMI is a massive 723 cents (34.6%) lower than a year ago, meaning just 10% was lost in the period from August 2018 till end of July. The “super-cycle” that most analysts talk about is certainly over. This is the 5^th such cycle since the market’s big jump in 1988. Reasons for the downturns in the market after theses super-cycles are varied and all not related to the wool market, rather global external factors. If we look at the 4 downturns this century: 2003 to 2005 with the SARS outbreak in China the EMI fell 608 cents (49%) to a low of 632; the GFC period of 2008/09 saw a 328 cent drop to 721 (31%); from 2011 to 2012 a 35% (501 cents) fall to 933 was due to the massive cotton stockpile that China had built up after the GFC; and, of course, this current downturn which hopefully is nearing its end.

Now we are faced with new global challenges that will take time (up to 2 years according to some economic experts) to sort out from Brexit to the US/China trade wars which took a new twist this week. As of Monday the US lifted tariffs by 10% on a vast range of imports from China (worth $300B) from 20% to 30% but for woolen clothing the tariff was raised by 15%. Have prices “overshot” their high and low points?? Many believe so and the fundamentals of supply and demand get lost in the over-correction when the market goes in either direction. Many traders believe the market reached an unsustainable height last year and this current correction has gone too far. Hopefully the market can maintain the level it finished at on Thursday.

Ag Concepts Fwd Prices as at 30 August, 2019       

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 30th August, 2019

 AWEX Northern Micron Indices Comparison

ANOTHER DISASTROUS WEEK!

Just when there was a glimmer of hope the market might steady, woolgrowers were hit between the eyes with a sledgehammer for the second time in 3 sales!! The market took another savage hit with all microns recording triple figure losses, < 18.5 back by 90 to 110 cents while 19s and broader collapsed by 135 to 170 cents with only the very best types immune from the almost complete lack of support. Skirtings fared worse as better style, low VM types fell 70 to 100 cents while burrier (> 4%) lots with col and dust were quoted 180 to 250 cents from last sale’s levels. Cardings were also savaged by a lack of demand - all types in this sector reduced by 80 to 140 cents. The MCI has now lost an average of 93 cents for the past 2 sales and now sits at 806 a percentage ranking of just 6, meaning it has been higher 94% of the time over the past 5 years. Crossbreds came through the sale virtually unscathed - losses ranging from to 25 cents. The pass-in rate climbed to 35% with 18% withdrawn which saw 47% of the original volume rostered for sale actually sold.

On a brighter note, our seminar on Sheep Welfare and Husbandry Best Practice was attended by 90 woolgrowers keen to hear the guest speakers from wool buyers to vets and reps from current products and gain insight into some newly released products that can assist growers in the absolute best practice welfare for their sheep. It was a very informative day with the message coming through loud and clear that from the consumer who buys woolen garments to vets, whether your sheep are mulesed or non-mulesed, the best welfare practice is critical.

The National Merino Sheep Show and Ram Sale was held in Dubbo this week as the drought tightens its grip and the wool market continued its dramatic fall. Talk of a tough sale was spot on as the clearance rate fell to 53%. Roseville Park topped the sale with a ram selling for $22,000 and a $7,000 average; Langdene averaged $3166; and Alfoxton from Armidale who won the Supreme Champion Ram sold another for $16,000.

A few buyers have reported good volumes of business overnight that hopefully might stop the rot next week.

Ag Concepts Fwd Prices as at 30 August, 2019

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 23rd August, 2019

 AWEX Northern Micron Indices Comparison

MARKET STEADIES!

All participants were still in shock from last series’ falls and wondering what this week would bring. Showfloor chatter amongst the buyers that some business had been done on a variety of types just below current levels gave hope that the market may level out sooner rather than later. The AWEX EMI lost just 16 cents but did fall below the 1500 cent mark to 1497 - this result welcomed as good news after last week’s carnage. Fine microns bore the brunt of losses, < 19 micron 40/50 cents with broader types 20 to 30 cheaper with the odd superior style wool and NM type dearer. One sector that did advance was skirtings, 40 to 50 cents higher, just 10% passed-in. Crossbreds also reversed last sale’s collapse adding 25 to 45 cents. Cardings took the largest hit of any sector with the 2 MCIs on the east coast averaging 94 cent losses as LKS/LMS lost 100 to 200 cents while CRT/STN gave up 50 to 60 cents. The overall pass-in rate fell to 16%, a drop of 20% compared to the previous sale with 16% also withdrawn resulting in a third of the wool available at the start of the sale not sold.

This week’s sentiment was vastly improved when compared to the fortnight before, with a very cautious tone. The demand for wool has fallen sharply due to lack of confidence and partly to blame is the devaluation of the Chinese Yuan (CNY). One US$ buys over 7 yuan compared to 6.8 yuan in July. All the other external problems in the Northern Hemisphere are still well and truly in play and this week Germany announced that its economy is slowing as is Britain’s (they’re yet to admit it). Trouble is also brewing in SA as wool sales have been suspended indefinitely as frustrations re the requirements of current export certification of greasy wool into China were conveyed and the ensuing implications for buyers and growers. Auctions will resume ASAP when clarity is obtained regarding export certification requirements of greasy wool into China.

We still have spots available if you want to attend the Sheep Welfare Seminar on Tuesday. Please reply to the office by Monday on 6884 1004 or email admin@macwool.com.au.

Ag Concepts Fwd Prices as at 23 August, 2019

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 16th August, 2019

 AWEX Northern Micron Indices Comparison

HORRENDOUS!!!

One word could best describe this week’s wool sale, ”HORRENDOUS” as all sectors of the market plummeted to have the AWEX EMI at its lowest level for 2 years, now at 1513. The fall was 163 cents for the series, 9.7%, which is the largest weekly fall since 2003 with the biggest opening day fall in 11 years. Finer types < 19 micron fell 100 to 150 cents while 19.5 and broader averaged exactly a 200 cent shellacking. Skirtings gave up 150/200 cents, crossbreds were back by 130 to 160 cents while cardings reversed last week’s gains to fall 20 to 80 cents depending on type. The national pass-in rate was 36% - the highest for 16 years with 17% withdrawn. The only exception to the massive discounts were the sub18 micron best topmaking/spinners style where reductions looked to be 40 to 70 cents and most non-mulesed types increased their premiums dramatically with some “NM” lots  commanding 60 to 400 cents clean over the indicator price as buyers report more and more enquiry for NM wool. Prior to recommencement of sales the premium was in 50 to 20 cent range. Our NM wools came from Gilgandra and Binnaway to Yeoval, Wellington and Gulgong that were paid handsomely for their wool.

Again the predicament for the wool market was external factors as global stock markets shuddered on the forecast of global recession on the horizon; the ongoing unrest in Hong Kong along with Brexit; the tariff wars and tension in the Persian Gulf which has most Western governments nervous. When this happens consumers become cautious and stop spending money thus slowing economic growth. Some good news is the US decision to delay some new tariffs from September to December following pressure from retailers fearing a negative impact on their turnover but, for Aussie wool producers, woolen clothing imports from China wasn’t granted the extension - this decision adding to Chinese processors’ concerns for orders for their Autumn/Winter season.

The Australian wool production forecasting committee met on Wednesday and, to no-one’s surprise, their forecast was down 5% to 285mkg for this current season due to ongoing drought resulting in less sheep (record prices for lamb and mutton) and low lambing rates that are hamstringing growers from increasing flock numbers. Buyers have reported sporadic volumes of business being done with the market soon to find a level.

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 9th August, 2019

 AWEX Northern Micron Indices Comparison

WOOL MARKET GETS TRUMPED!!

Wool sales resumed this week with the market copping a hiding. Talk late last week and early this week was positive for some sectors of the market but sentiment did a 360 degree turn as external influences took their toll. Large falls on both days saw the AWEX EMI collapse by 78 cents to 1676 as finer microns (< 18.5) lost 60 to 90 cents and 19s and broader shed 120 cents. Skirtings fell by 70 to 100 cents while XBs gave up 30 to 60 cents. The only positive sector of the market was Cardings, most types adding 20 to 60 cents to their pre-recess levels.

Why the sudden change?? The tit-for-tat trade war between US and China escalated to new levels this week with Trump announcing a 10% tariff on US$300 billion worth of Chinese goods bound for the US. In retaliation China devalued its currency (RMB/Yuan) after it fell to an 11 year low (at the start of the GFC) caused by the tariff measures imposed by America. A weaker yuan makes Chinese exports more competitive thus offsetting the impact of raised tariffs in theory making Chinese products cheaper for consumers. On the flip-side the weaker yuan makes imports going into China more expensive: coal, gas, iron ore and wool so the price paid is adjusted down to compensate. The Chinese move to make their exports more competitive strikes at the heart of Trump’s trade war with them with many economists predicting the yuan could be devalued by another 5% by the end of the year - more bad news for Aussie exports to China.

With the positive start to the season in early July and a 2.8% swing in the FRX since then, hopes the market could continue in the same vein were short lived. Despite the ongoing short fall in supply, confidence from mills in China has all but eroded, as sales are running at about half of the normal quantity and most plants running at about 60-70% of their capacity which, given the lack of volume, they are still processing 10 to 20% more wool than they can sell down the pipeline, thus the potential for more price falls. As global economic growth slows consumer demand wanes as the prolonged trade war has some economists talking recession if a resolution isn’t forthcoming soon. Next week has a similar volume of wool available but no sign that the market can rebound. Don’t forget to register for the Sheep Welfare & Husbandry Best Practice Seminar at the Garden Hotel on 27^th August.

Ag Concepts Fwd Prices as at 5 July, 2019        

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 12th July, 2019

 AWEX Northern Micron Indices Comparison

MARKET FINISHES DEARER!!

Hopes were high that the market could continue its recovery from last week for the final sale before the annual 3 week winter recess. Solid gains on both days saw the AWEX EMI add 31 cents to finish at 1754. The push to secure wool was evident from the opening lot through to the end of the sale as buyers were keen to finish outstanding orders and new business for prompt shipment that was written 2 weeks ago. The small volume of wool on offer and the favourable FRX certainly helped lift all MPGs by 20 to 45 cents - some types with “good specs” were in the order of 20 to 100 cents dearer than the indicators.

Merino skirtings outdid their fleece counterparts as excellent demand saw prices ascend by 70 to 90 cents for all types regardless of VM, micron or yield. Cardings also continued their recovery. This sector saw gains of 25/30 cents as the MCI broke back through the 1000 cent mark to finish at 1010, a 29 cent gain. Crossbreds weren’t immune from the rising market as well with 28 to 30 micron 15 to 25 cents to the good.

There was much relief as the market continued its good start to the season after the hiding it took in June. One alarming figure to come out of the 2 opening sales is the small volumes, 65,000 bales offered compared to 84,400 in the corresponding sales 12 months ago, 19,350 less (23%). Confidence is a massive driver in any commodity market and wool is no different. The resumption of sales in the 1^st week of August will be closely watched to see whether the positive buoyant mood can be transferred into meaningful volumes of new business to stabilise the whole supply chain as a mini recovery for 2 weeks has not convinced traders that we’ve turned a corner. The elephants in the room are still there: China/US tariff war, global economic growth slowdown, Brexit troubles, Middle East unrest and the ability of end users (manufacturers to retailers) to still absorb the higher prices will all play critical roles in price determination into the spring. 

AWI, in conjunction with local shearing contractor Hilton Barrett, have created a new and innovative shearing shed design to address work efficiency/safety, flow of sheep, animal welfare and quality wool prep. The shed will be open for display on Saturday 27^th July from 10am to 2pm. The shed is located north of Dubbo, turn west off the Newell Hwy at Brocklehurst (Burraway Rd) go 2.5km then turn right. More info at awi.com.au/events.

Ag Concepts Fwd Prices as at 5 July, 2019        

Main Buyers (This Week)