WEEKLY MARKET REPORT

Week Ending 16th October, 2020

 AWEX Northern Micron Indices Comparison

HOW QUICK THE SENTIMENT CAN CHANGE!!

The market exploded into action this week as buyers were desperate to secure wool from the opening lot to the final fall of the hammer in Fremantle on Wednesday. It was tipped to be a sedate series late last week with most good judges talking a firm market to sellers. Favour changed late on Friday when the enquiry started from China and kept coming all weekend. As one buyer said, “we got smashed,” with agents keen to book up any type of wool. Futures pointed to gains of 40 cents and the market didn’t disappoint as the AWEX EMI climbed by 44 cents on the opening day. This was followed by even higher rises in the final session (51 cents) to finish the week at 1117, a rise of 95 cents (9.1%). The rise in US$ terms was almost as impressive - a 74 cents gain to 801 - despite the FRX ascending by 0.65% to 71.75 cents. All fleece types were swept up in the dash to secure quantity as all microns climbed by 110 to 150 cents regardless of any discounts on faults. Some of the better superfine (< 18 micron types) were up 200+ from last week’s quotes. Just 36 bales of fleece were passed-in in Sydney - a clearance rate of 99.25%. The skirting sector performed just as good with all types across all microns adding 3 digits to last week’s values. Finer than 18.5 rocketed up by 130 to 180 cents while the broader microns added 110 to 150 cents. Once again, growers liked the new price levels as just 10 bales (0.6%) failed to sell in Sydney. Cardings also enjoyed price rises but not quite to the extent of their combing counterparts. All types < 17.5 micron lifted by 90 to 120 cents while the broader wools were 30 to 60 cents to the good as the 3 MCIs now range from 788 to 754 cents. Crossbreds, like the carding sector, didn’t have the hype of the merino combing wools but still rose 50 to 70 cents for 27.5 and finer and 30 to 40 cents for the coarser types.

Traders were again the dominant force in pushing the market up with 1^st stage manufacturers appearing in the top 5 buying positions for merino skirtings and cardings. Risk mitigation is key in these trying times and the buy and sell prompt methodology is working in favour of the inventory building traders. The frantic enquiry over the weekend and the steep opening session’s price rises didn’t deter Chinese mills from baulking at the new levels which could form a basis for the foreseeable future. One buyer told us every bale they bought on Tuesday was sold by 7:00 that night. The EMI now sits just 7 cents below the Sale 2 level with < 19 micron all higher than in July - before the rot set in when sales resumed in August. Since the resumption the market has collapsed and then recovered 276 cents, most of that over the past 6 weeks. Fremantle had its largest daily gain (113 cents) since September 2019.

Whilst the news of this current price recovery and a possible “floor” in the price is welcome, there is still a long way to go before we can assume all is good with the wool market. Many global factors will influence market direction. The geopolitical nature of the Pacific rim is a concern for all countries when trade is mentioned. As Australia has seen recently diplomatic tensions have led to bitter trade tensions between China and Australia that have seen crippling tariffs placed on our wine, barley and beef exports into China. The latest victim looks to be cotton (an $800m export market) with Chinese mills told not to buy Australian cotton with the threat of a 40% tariff being imposed. Cotton millers are given an import quota each year and have been told they may not receive this allowance if they continue to buy our cotton. Worrying times indeed.   

Futures have traded at a good premium to the spot price indicating another good market next week.

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 9th October, 2020

 AWEX Northern Micron Indices Comparison

MOST LOSSES RECOVERED!!

As we forecast last week the EMI rose back through the 1000 cent barrier adding 26 cents to its value to finish this series at 1022. An FRX rate that remained flat throughout the sale had the EMI in US$ terms up by 19 cents to 727. Finer fleece types (< 17.5 and 19s) edged higher by 30 to 40 cents with discounts for overlength, tender, VM and high mid-breaks almost non-existent with these wools selling for levels usually reserved for European types while all other microns added 20 to 25 cents with most growers happy to accept these price rises as just 4% was passed-in.  The skirting catalogue had an identical sale as < 17.5 rose by 30 to 50 cents; 17.5 to 18.5 were quoted 25/40 dearer while broader types across all VM levels added 20 to 30 cents. Again growers were happy to accept these price increases clearing 97%. Cardings had a very solid sale as all types were quoted as sellers’ favour. Crossbreds also staged some sort of comeback with all microns lifting from 15 to 35 cents.

Opinion was divided as to which way the market would go. One of our well informed sources said the market would be solid to dearer but other exporters were tipping firm to buyers’ favour. As the opening day progressed the “fence sitters” had to re-enter the market to avoid buying wool at the dear point of the series. Traders dominated the fleece sector with first stage processors calling the shots for all other types. Chinese demand is still dominant but, as each week goes by, small pockets of enquiry from India and Europe are becoming more evident. Even as greasy prices improve the retail sector is still very cautious to commit to placing new season orders as big volumes of old (or out of season inventory) is sold to the consumer hopefully as at small profit or break-even point but signals from retail on a macro level are on the improve. The elephant in the room is still Covid-19 and the race to find a vaccine is still at the forefront of all Western governments desperate to get the masses back to work to get economies growing again without having to go deeper into debt with more stimulus packages. The more chance consumers have to go shopping and spend money on discretionary goods such as wool the quicker the market has the chance to recover to acceptable levels.

A few more Ram sale results: Parkdale at Dubbo sold 115 rams for a top price of $8,200 to average $1,795; Boxleigh Park at Wellington cleared 95% with a top of $3,750 to average $1,860 for their mix of Poll and Horn rams; also at Wellington Mumblebone averaged $2,920 to clear all but 2 of the 260 rams offered with a top of $14,000; Bundilla at Young sold all but 5 of the 300 rams on offer to average $3,790 ($520 higher than last year) with a top of $11,000 twice and Charinga in Victoria achieved a top of $38,000, an average of $4345 for 141 Poll rams and Horned rams average $2,680.

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 WEEKLY MARKET REPORT

Week Ending 2nd September, 2020

 AWEX Northern Micron Indices Comparison

EMI UNDER 1,000 BUT JUST FOR ONE DAY!!

The wool market was unable to sustain its mini recovery this week as prices softened across most sectors. A combination of factors from softer enquiry levels, urgency for prompt shipment abating and the increase in volume by 7,700 bales to 31,000 (the largest catalogue since mid August) was the impetus for buyers to take their foot off the pedal and take a step back from the buying patterns of the past 3 sales. The AWEX EMI retreated by 40 cents to 996 (-4%) and gave up 30 cents in US$ terms to 709 as the FRX softened by a third over the course of the sale to 71 cents to have nil impact on price direction. All fleece types lost 20 to 60 cents, the discounts followed the microns, increasing as the wools got broader. The skirting selection followed the same pattern as their fleece counterparts - just a 20 cent fall for < 17 micron as broader types across all descriptions fell by 40/60 cents. Cardings had a mixed sale as < 17.5 LKS gave up 30/40 cents while the broader types added 10 to 15 cents with merino and XB lambs gaining 20 to 50 cents with STN/CRT fully firm. These movements saw the MCI up by 7 cents to 730. Crossbreds opened the sale on a dearer note (+10 cents) but 28s and coarser lost 30 cents in the final session to finish the sale cheaper. As the sale progressed buying became more widespread across all types. Merino fleece was dominated by traders with all sectors in room 2 (skirtings, cardings and XBs) coming under more pressure from 1^st stage manufactures and processors - a good sign of interest being reignited down the processing pipeline. The light at the end of the tunnel is still on the dim side but may become brighter in the run to Christmas. Intertextile Shanghai was held last week with Chinese fabric producers showing off their collections for Autumn/Winter 2021-22 with good levels of enquiry for samples and price requests. This does not lead to a full blown recovery but a bumpy ride with some speculators talking more upside soon as the August slump was an over-reaction, but on the flipside the 3 week rise we saw was over-reaction in the other direction - who’s right or wrong?? Recent HIS market surveys of PMIs (purchasing managers intentions) the US services sector fell from a 17 month record high but manufacturing was up on the previous month. This was a similar scenario in Europe.

AWTA released its September testing figures with a surprising jump of 7.8% more wool tested than September 2019.This could be a result of some growers shearing early to avoid a clash of shearing with (hopefully) the big harvest just around the corner. The cumulative figures for the 1^st quarter of the year show an identical fall (7.8%) in wool tested when compared to last season 57.5mkg to 62.4mkg.

Some ram sale results from the past week: Allendale at Wellington had a top price of $4,000 to clear 87% with the average increasing by $85 to $1870; Cassilis Park Cassilis offered a mixture of Polls, Horns and Megas to sell all but 1 ram from 80 offered to average $2,145 with a top price of $6,400; Dunbogan at Elong sold all 56 rams on offer to average $2,245 with a top of $4,000 four times. Langdene at Dunedoo cleared 98% of their draft of Polls and Horned rams to top at $6,500 twice to average $3,230 up by $200 on last year; Bogo at Yass sold all 169 rams with a top of $5,000 to average $2,805; Richmond at Quandialla sold all 110 rams to average $2,275 up by $336 from last year with a top of $10,000. A $15,000 top price was achieved by One Oak Poll at Jerilderie to average $2,435 clearing 95%; also, at Jerilderie, Willandra had a top of $13,000 to average $2,735 to clear 91%. Show floor chatter is for a firm market next week with the EMI to break through 1000 cents again.

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WEEKLY MARKET REPORT

Week Ending 25th September, 2020

 AWEX Northern Micron Indices Comparison

A THREEPEAT - IS THERE MORE IN STORE??

The talk of the anticipated rising market late last week came to fruition but much more than anyone was prepared to call. A frantic opening session was followed by a more measured approach on the final day but still the market did what growers had been yearning for, a big lift in prices. The AWEX EMI climbed by a massive 99 cents to 1036 to add up to a 178 cent lift (21%) over the past 3 weeks. The gain in US$ terms was 53 cents to 739 as the falling FRX to 71.35 certainly helped. This series’ opening day’s rise of 59 cents (6.3%) was the largest daily gain in 12 months and the largest weekly lift over the same period. This recovery goes part of the way to cancelling out the 27% (276 cents) fall the market suffered through August and early September. Merino fleeces all rose by triple figures, 100 to 140 cents with no type neglected. Skirtings also rocketed back to reasonable levels with < 18 micron adding 120/180 cents and broader lots 80 to 100 cents to the good. Cardings continued to claw back their lost money as the 3 centres’ MCIs averaged 60 cent increases. All descriptions added 50 to 130 cents depending on style, micron and VM.

The new business that was written 3 weeks ago has kept coming to most people’s surprise. One buyer we spoke to said the enquiry on Tuesday night was the highest level for 18 months thus giving exporters a new aura of confidence to do more business. Local traders led the recovery with Chinese indent orders and overseas top-makers sniffing around the edges. In other good news European and Indian orders were in the market with Italian mills picking the eyes out of this week’s designated Superfine sale selection (albeit at small volumes) but the more enquiry coming normally converts to fresh business being written and increased competition. The same buyer seems to think that these levels could be the base from which the market can go forward providing growers don’t flood the market with wool held in store that has been waiting for price increases that we have seen over the past 3 sales.

Ram sales continue with great results. This week’s sales have gone like this: Bella Lana at Wellington cleared all 125 rams for a top of $10,000 to average $2,490; Gullendah at Yeoval offered a mix of Dohne and Polls (140) to sell all but 1 poll ram. The Dohne’s averaged $3,115 to top at $5,000 twice and the Polls averaged $2,100 with 2 rams selling for $4,000. Tara Park at Boorowa achieved a top price of $10,500 to average $2,520 selling all but 2 rams. Trynow at Goolma had a top price of $1,600 5 times for an average of $1,070 to clear 86%; Poll Boonoke and Wanganella at Conargo sold all 200 rams to average $3,470 with a top of $13,000; also in the Riverina at Pooginook, Jerilderie, the mix of Polls and horned rams had a 98% clearance with a top of $7,000 for a poll ram with the top merino making $4,000 with an overall average of $2,625; Lachlan Merinos at Forbes sold all their 140 rams with a top price of $11,500 to average $4,075; a $10,500 top price was achieved by Coddington Uardry Poll at Dunedoo with a total clearance to average $1,740; and Calga Dohne stud at Coonamble sold all 73 rams for a $4,000 top price twice and an average of $2,375. Next week’s catalogue has grown to 33,200 bales. Will the market hold at these levels??

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WEEKLY MARKET REPORT

Week Ending 18th September, 2020

 AWEX Northern Micron Indices Comparison

TWO WEEKS RUNNING. WILL IT BE THREE?

The increased volume for this series looked to be problematical for exporters when valuing for this week’s sale as all the talk was for a cheaper market that was most likely going to erase last week’s gains. By the commencement of sales, sentiment had changed for the good with solid increases as the week progressed. The AWEX EMI added 47 cents (5.3%) to 937 with a similar gain in US$ terms - 43 cents (6.5%) to 686 cents. The extra 1% gain in US terms came about from the upward shift in the FRX. Normally this would be a hinderance to the market’s direction but helped the market this week as the FRX strengthened over the course of the sale to 73.20 cents, up by 1 cent. Merino fleece prices rose across the board from 30 cents for 21s to 70 cents for 18 micron. The highlights were in Melbourne and Fremantle where 17.5 and 18.5s rose by 100 to 115 cents something we haven’t seen for some time. Skirtings were also caught up in the increased demand as < 18.5 micron jumped by 50/80 cents with the broader selection gaining 30 to 50 cents. Cardings continued to make upward adjustments with the 3 MCIs averaging 30 cent rises as all types in this sector made gains from 30 to 100 cents. Crossbreds weren’t left behind as they continued their rise from the ashes with most microns lifting by 20 to 70 cents.

Chinese buyers led the charge with some European orders from forward sellers and indent top-makers. Fresh business coming from an increase of enquiry that has converted into firm orders is something that has been lacking in the market since sales resumed in August when speculative stock buying was non-existent and the odd new order was filled easily as no big volume of new business was written. Is there a change in the wind?? Two weeks of rises doesn’t lend itself to a full-blown recovery but any rise in any commodity is always welcome. Of course, the elephant in the room is the 2^nd wave of Covid-19 that is rampant in some countries and lockdowns and restrictions are being re-introduced hindering economic growth. The widespread release of a vaccine in the Northern Hemisphere (our critical markets) will go a long way to getting people back to work quickly and consumers spending money again without fear of not being treated if they catch the virus.

Ram sales continued this week with some outstanding results for both Merino and XB studs. Some results include: Gullengamble at Yeoval clearing 91% for a top of $6,500 3 times to average $2,590; Yarrawonga at Harden sold 97% to average $2,975 with a top of $16,000; Gilgandra’s Weealla stud sold 97% of their draft for a top of $4,000 to average $1,660 ($260 higher than last year). Another local stud, Roseville Park, cleared all 210 rams to average $2995 with a top of $26,000 these 3 studs offering a mixture of Poll and Horned rams. Merryville stud at Boorowa sold 101 rams with a top price of $6,000 to average $1750 and the MPM Stud (Multi Purpose Merino) at Girilambone cleared all of their draft for a top price of $3,200 to average $1,540. Next week’s national catalogue is 25,000 bales with a designated super-fine sale in Sydney. Showfloor talk has the market dearer again.

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 WEEKLY MARKET REPORT

Week Ending 11th September, 2020

 AWEX Northern Micron Indices Comparison

A SLIGHT RISE BUT ….

Talk of a reversal of the downward trend of prices rang true early in the series but the newfound optimism and hope that the market may have finally turned the corner went as quickly as it arrived as prices faded late in the sale. The falls weren’t as large as the rises so the AWEX EMI posted its 1^st weekly gain since early July (following 5 weeks of falls totaling 276 cents) a rise of 32 cents to 890. The fall in the FRX to 72.2 cents had the EMI add just 12 cents to 643 in US$ terms. All fleece microns finished the sale 30 to 55 cents higher; the opening session’s rises saw 99% sold. Skirtings also saw a sharp increase in demand with all descriptions jumping by 30 to 50 cents as again growers were happy with the price hike to clear 98%. Cardings also rose but not to the extent of their combing counterparts as < 18.5 micron for all types added 20 to 30 cents to their previous values. Crossbreds also lifted themselves off the canvas to add 60/80 cents for 26s and finer while broader types were 30 to 50 cents dearer.

The sudden surge of enquiry late last week came almost exclusively from Chinese manufacturers converting virtually no demand into a dearer market that required prompt delivery which meant contracts had to be met quickly. This new business was the first real action to arise since the season opened in July. Exporters facing harder and leaner times need to cover risk quickly to maintain the funding of overheads with diminishing opportunities of trade while attempting profitable conclusions to those limited orders that are available at the moment. The new enquiry coincided with the smallest national catalogue since mid June and a favourable swing of almost 2% in the FRX the short lived price rise saw the national pass-in rate drop to just 6%, the highest clearance rate since July.

The Australian Bureau of Statistics has released data on wool exports for July which don’t paint a pretty picture. The total volume of wool exported was 8% less and the value was a massive 37% down when compared to July, 2019. Exports to China and Thailand were actually up by 8% and 13% when compared to July last year but exports to Europe fell by 59% and an incredible 79% in value while the volume to India saw a 37% decline in volume with the East Asia trio of Japan, Korea and Taiwan having a reduction of 45% from the previous July. All major wool processing countries saw declines also except Germany - their exports rose by 27% year-on-year for July. Other destinations saw declines: Italy back by 14%; Czech Republic down by 38%; and India 12% less. These figures are a stark indication of the falling wool market due to weak consumer demand.

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 4th September, 2020

 AWEX Northern Micron Indices Comparison

MARKET DIRECTION – ANYONE’S GUESS BUT WHO KNOWS??

The wool market continued on its sorry path downwards this week as little to no new business was written and, as we forecast, the EMI fell below 900 cents. The ascendency of the FRX by over 2.3% to 74 cents certainly didn’t help but the main factor was, again, the genuine lack of demand. Both days saw double digit falls for all types in all sectors. The EMI dropped by a further 71 cents to 858 and, with the stronger FRX, the fall was 37 cents in US$ terms to 631. Merino fleeces lost 65 to 90 cents across most lots with the Best style FNF, sound types up to 30/50 cents lower. Skirtings also took a hammering as losses ranged from 30 to 80 cents. Despite these heavy falls growers were willing to meet the market as just 7% was passed-in. After last sale’s unexpected rises cardings followed the combing types lead to cheapen as well with broader than 17.5 micron STN and CRT 20 to 30 cents back with all other descriptions either side of unchanged. The sorry state of the XB market continued with heavy losses for the finer microns; 26s collapsed by 120 cents in Sydney and 155 cents in Melbourne with all other microns falling by 30 to 50 cents. At just 190 cents (clean) 32 micron are at their lowest point since AWEX records began in 1995. AT these levels most XB fleeces (26 to 32 micron) are only bringing mid 300 cents to low 100s based on a yield of 70%, barely enough to cover shearing expenses.

Local traders dominated buyers’ lists this series with Chinese topmakers and Indent buyers adding some muted competition on the final day. Reports that European wool merchants are nearly all back from holidays and may lift the abysmal levels of enquiry over the next few weeks will be cautiously welcomed but growers shouldn’t be holding their breath. As usual, AWTA released their monthly testing figures this week. A massive 20% less wool was tested in August compared to the same month in 2019 and the progressive total for the season so far is 17% less than last season - 31.4mkg to 38.2mkg. In a surprise figure 11,680 bales (or 6.4%) more have been sold to the trade to date this season than last, this despite the market being a whopping 37% cheaper than 12 months ago and 750 cents (50% cheaper than the opening sale in January). Reasons could be varied for the extra sell-off from paying off feed or farming bills to just quitting their wool before the market gets any worse.

Increased demand will be the only thing that will pull the market out of this rut. A huge concern is the “2^nd wave” of Covid-19 that some countries are experiencing and indeed some countries not getting on top of their 1^st wave. If lockdowns and restrictions are enforced again or extended economic recovery will be even further stalled than is anticipated costing governments $billions extra in stimulus and welfare packages for their populations. More and more protests globally against these harsh restrictions may well lead to governments realising that, for the sake of the sanity of their people and their own political existence, a quicker return to normal life will speed up economic growth and may need the pandemic to run its course till a vaccine is released - the course of action they need to adopt??

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 28th August 2020

 AWEX Northern Micron Indices Comparison

SMALL QUANTITY – SMALLER DEMAND!

The sorry state of the wool market was no more evident than this week as the market slipped further with only the 2 eastern seaboard centres in action. As we predicted the reduced weekly volume of just 20,500 bales - the smallest this season and the least offered since mid June - couldn’t sustain the market. The AWEX EMI lost another 16 cents to 926 with the fall identical in US$ terms (16 cents to 668). A reduction in the FRX by half a cent to 71.90 and the designated superfine sale in Sydney were not enough to keep the market from falling. With the finer superior style offering in Sydney, < 19 micron did show an ounce of resilience with the indicators up to 10 cents dearer with the odd lot attracting a premium up to 60 cents but 19s and broader dragged the overall market into the red as they fell by 10/55 cents. The story was similar for merino skirtings as the better style types were either side of firm while the broader/burrier types gave up another 20 to 30 cents. The carding sector bucked the downward trend of all other sectors and rebounded after 3 series of heavy losses (180 cents). LKS led the price recovery with gains of 40 to 70 cents while CRT/STN added 20 to 30 cents, a welcome rise after the recent battering they took. Crossbreds also contributed to the EMIs fall as all microns from 25 to 32 gave up another 20 to 60 cents. With some sectors of the market maintaining a ‘status quo’ or increasing in price the pass-in rate dropped sharply, to just 11%.

Chinese top-makers dominated buying lists with local trading exporters making some sort of impression across most types with the superior selection encouraging some interest from Italian mills on the very best types on offer. The bread and butter fleece wools from 19 to 22 micron (which was the easily traded and most used type) are struggling to capture any demand and continue to be out of favour with most processors. This is reflective of how current volume is unable to be moved swiftly through the supply chain.

The National Sheep Show and Ram Sale was held in Dubbo this week but under a Covid-19 affected format. Less studs were on show (34) and no commercial sheep on display or to be judged. There was no Supreme ram judged due to national travel restrictions not allowing any interstate champions to be on site to go up against the NSW champion. The auction was interfaced with Auctions Plus with 47 rams up for sale. Top price went to local stud, Roseville Park, with a sale topping price of $31,000 bought by Chris Bowman on behalf of a syndicate of 4 Australian and 1 NZ stud. Their draft of 8 rams averaged $9185. Other results included: Langdene, Dunedoo - 4 rams sold for a top of $10,000 to average $6125; Nerstane, Woolbrook - 1 ram sold for $6,000; West Plains Poll from Delegate sold 1 ram for $10,000; Adina, Cooma topped at $5,000 to average $3,500; Darriwell, Trundle sold 2 rams to average $6750 for a top of $10,000; and Coddington, Uardry achieved a top price of $3,500 to average $3,250. The 32 rams sold for an average $6155. Next week has all 3 centres in action with a catalogue of 33,000 bales. If more business isn’t forth-coming the market will struggle to stay above 900 cents.

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Main Buyers (This Week)

 WEEKLY MARKET REPORT

Week Ending 21st August 2020

 AWEX Northern Micron Indices Comparison

DEMAND FALLS - MARKET SLIPS UNDER 1,000cents!

Last series’ small glimmer of hope that the consolidation of merino fleece prices may have finally signaled an end to falling prices and the AWEX EMI staying above 1000 cents was not to be. Another sharp correction across all sectors this week dashed any hope that the market could sustain prices above the 1000 cent “psychological” level at which many in the industry had probably hoped more than predicted  that the market would not fall under. The EMI lost 59 cents to 945, a 6% fall, now its lowest level since October, 2012. The fall was 30 cents in US$ terms to just 685 as the FRX ascended to 72.50 cents, up 1.25 cents for the week and its highest point since February 2019.

From the opening lot prices softened on all types in all sectors. Merino fleeces fell by another 30 to 75 cents with very little premium for NM lots or FNF types. Skirtings also suffered big losses as 17s and broader (regardless of VM) fell by 20 to 80 cents with superfine types < 3% VM just into buyers’ favour. After their big fall last week cardings also were cheaper but didn’t suffer losses like the previous series. All types in this sector fell by 20 to 35 cents. Crossbreds were the sector to suffer the biggest hit. 27 micron and finer collapsed by 80 to 140 cents while all other microns gave up 30 to 70 cents. 42% of the crossbred offering was passed-in in Sydney. Once again large European top-maker, Modiano, was the dominant buyer for this sector snapping up 27%, perhaps the only exporter to see value in these low price wools.

The market’s large fall saw pass-in rates soar to 26%, up from just 8% the previous sale, to see just 24,600 bales sold to the trade from the 33,100 offered but even this small quantity couldn’t be met with enough demand. The almost 2% upward shift in the A$ didn’t help but was by no means the sole contributing factor to the downward spiral the market is experiencing at the moment. Chinese topmakers dominated the merino combing sector but under limited competition especially for “off types” and the dwindling volume of dusty low yielding wools. Local and overseas traders fled to safety  as incomplete or easier traded types came under buyers’ scrutiny but the distinct lack of new business once these few outstanding orders were filled saw a few buyers barely bid and the market fell as no-one is prepared to buy “on spec’ in the hope of selling that wool post purchase to downstream users. Speculation has completely gone from the modern day traders psyche. It seems no buyer is risking purchasing any quantity of wool that hasn’t been sold on down the processing pipeline. It’s interesting to note 1.2% more wool has been offered to date this season than last and 7% more has been sold even though the market is a massive 37% cheaper. Just the 2 eastern seaboard centres are in action next week with 22,300 bales on offer. In this demand-poor climate, this may be too much wool.

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Main Buyers (This Week)

WEEKLY MARKET REPORT

Week Ending 14th August 2020

 AWEX Northern Micron Indices Comparison

CAN EMI STAY ABOVE 1,000??

All participants held their collective breaths this week as any downward shift in prices across the board would see the AWEX EMI fall below the 1000 cent mark - a demoralising stat that no-one, especially growers, would not want to eventuate. Thankfully this didn’t happen as slight movements both sides of a solid market had the EMI tract lower by just 2 cents to 1004. The market seemed to split into 2 directions as merino fleece wools edged higher over the course of the series to add 5 to 25 cents to their previous values. Growers seemed to accept the renewed interest from exporters as 95% of fleece types were sold. The twist in the tail came in Room 2 as skirtings < 18 micron finished in sellers’ favour by 10 cents while broader types slipped by 20 to 40 cents. Cardings was the sector that took the biggest hit as CRT/STN gave up another 20 to 60 cents while LKS tumbled by 60 to 100 cents with the carbonising types in this sector struggling to find any level of support post 1^st stage manufacturing. The 3 MCIs fell by an average of 72 cents to now range between 651 on the Eastern seaboard to 669 in Fremantle. This seismic downward shift in Cardings caused the EMI to fall rather than stay unchanged or rise slightly. Crossbred’s movements were minimal as most types were up to 10 cents cheaper.

The supply and demand ratio looked about right this series as the 30,300 bales on offer were much more manageable than the previous sale’s volume. National quantities around this figure look about right relative to current demand as just 8% of the offering was passed-in. Local exporters led the consolidation on the opening day as overseas processors were caught off guard but then played catch-up in the final session to push merino combing types dearer. Some Chinese topmakers have moved some quantity to Merino skirtings with European activity concentrating on the Crossbred sector as Modiano again secured 1/3 of this sector. The EMI is now at its lowest point since August 2014 with some wools at 5 to 10 year lows. These cheaper types being used as machinery fodder to keep mills running could be an astute move in the long term as cheaper tops will be on offer when demand down the processing pipeline picks up. Fleece wools must also look attractive at these low levels especially in US$ terms - 21 micron fleece converts to 770 cents, 19s are about 815 and a 17 micron fleece type will cost about 1070 cents on today’s market, cost certainly not the prohibitive factor. After the opening sale in January these same microns were at 1315 (21s), 1350 (19s) and 1440 for 17 micron in US$ terms, even these prices not outrageous for downstream users to make money.

Can the market sustain a level above 1000 cents?? If harsher Covid-19 lockdowns come back in force in the northern hemisphere we may see the EMI collapse even further. Many good judges thought 1000 would be the low point - they may unfortunately be proved wrong. Melbourne’s sale may be held via Zoom next week and extended to 3 days due to Covid-19 restrictions.

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Main Buyers (This Week)