WEEKLY MARKET REPORT 

Week Ending 20th December, 2019

 AWEX Northern Micron Indices Comparison

CONFIDENCE IS KING!!

Last sale’s upward shift in the market accelerated this week - the final sale before the 3 week recess. The AWEX EMI rose by 55 cents to 1558 and 32 cents in $US terms to 1066 despite the FRX staying well above 68 cents. Buyers were keen from the get-go with large increases in the opening session followed by a more measured approach on the final day but still good gains. All fleece microns posted gains of 75 to 95 cents regardless of style or any faults. Skirting’s were also in good demand as buyers pushed all types in this sector 60 to 90 cents higher. Crossbreds were also keenly sought after as most microns added 60/70 cents. The only sector to not explode in prices was cardings. Sydney and Fremantle averaged 20 cent rises while Melbourne lost 7 cents to have the 3 centres’ average price at 1070.

Despite the anticipated large offering (39,400), the high FRX and shipping logistics delays, the market had its largest weekly increase for 12 sales. The final volume offered was 12% lower than originally rostered due to a high withdrawal rate and with no chance to buy any meaningful quantity till mid January buyers were under pressure to fulfil outstanding commitments from the reduced selection on offer.

This year, particularly the final 6 months, has been one of the toughest periods for all in the industry. Firstly growers are still combatting the worst drought for over 100 years, massive reductions in sheep numbers, poor quality wool and a drop in the market of 17% (1862) from 12 months ago to 1558. The peak of the market was in mid February at 2027 and the low point was early September when the EMI got down to 1365, a 33% swing. At the high point in February just 252 cents separated 17 from 21 micron (2620 to 2368). At the cheapest point of the year the spread wasn’t much wider, 17s at 1842 and 21s were 1487 - a 355 cent difference. Exporters have had a year to forget as well. The high prices from last year into 2019 proved unsustainable as global events that we have spoken about in several reports conspired against them as consumer demand weakened. The market’s demise started in May and peaked in August, falling 163 cents in a single week only to stage a remarkable recovery in S11 climbing by 170 cents. Buyers, understandably, couldn’t trade with any confidence with such wild swings and are still feeling the effects now. The British election outcome and the softening of trade tariffs have boosted confidence that will hopefully carry on into the new year.

Southern Aurora Fwd Prices              

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 13th December, 2019

 AWEX Northern Micron Indices Comparison

MARKET BACK OVER 1500!!

After 7 straight days of falls adding up to almost 100 cents, the market had an unexpected turnaround as the AWEX EMI posted an 11 cent gain to 1503. Several factors were pointing to further losses for the market: the large offering, adverse FRX rates, the ongoing poor quality and global economic concerns almost certain to lead to a cheaper market. High rates of withdrawn wool (12%, 6000 bales) saw a much more manageable quantity for buyers to handle and some hidden prompt that appeared was all the impetuous the market needed to strengthen.

Despite the small upward adjustment this series was one of the most impressive sales of the season insofar as the big players of each segment dominated, local based traders to China led the merino sector, the biggest top-maker in the world was atop the crossbred sector and the largest global carbo processor was No.1 for cardings and oddments. Most fleece microns added 10 to 25 cents to their values. Skirtings had a mixed sale as the opening sessions’ gains were given up on the last day to leave them just in sellers’ favour for the week. Cardings averaged 19 cent losses across the 3 centres as all types fell by 10 to 30 cents. Crossbreds also had mixed results as < 26 microns were 15 cents lower while broader types added 10/20 cents.

The steadying market was welcome news after 3 weeks of falls and no talk that the market was about to stop its downward trend. Even after the high percentage of withdrawals buyers were faced with the largest catalogue since May but the end result was pleasing to all participants. The national turnover for wool sold passed the $1billion mark this week but it took 7 more sales to reach this milestone than it did last season - a result of the falling market and less wool offered (80,650 bales 10%). In what will be good news for the global economy (and the wool market) the US has agreed to halve tariff rates on $350bn worth of Chinese goods, some of which were as high as 25% and, in return, China would boost purchases of US farm products. This latest agreement should avoid US threats to impose tariffs on more than $150bn worth of Chinese exports that were due to start next week. Stock market reaction was swift as Asian markets rose 2% and Wall Street again set new records. Confidence is a great thing!! The market should end the year on a solid to dearer note for the final sale of the year.

Southern Aurora Fwd Prices              

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 6th December, 2019

 AWEX Northern Micron Indices Comparison

MARKET FALLS UNDER 1500 cents!!

Another tough week for the wool market as the downward trend continued on for the 3^rd sale in a row. Steady falls all week saw the AWEX EMI peel off by 38 cents to fall below the 1500 cent mark to 1492 - its lowest point in 13 weeks, 357 cents lower than this sale last year. In US$ terms the loss was only 15 cents to 1020 somewhat cushioned by the strengthening FRX to 68.5 cents. This ascendency, along with the subdued demand, contributes to the falling market. Losses were most severe in the finer microns, < 18.5 giving up 50 to 70 cents while 19s and broader fell by 30/40 cents with the better style, good spec types less affected while the dustier/tender lots saw the discounts widen on these. Skirtings also took a hammering with all types falling by 50 to 80 cents. The only highlight was the Carding sector which added 7 cents to 1061 while crossbreds lost 20 to 30 cents.

A wane in demand, the logistical headache of shipping wool over the Christmas/New Year period, the timing of the Chinese New Year (25^th January) and a sudden spike in offerings for the last 2 sales of the year are all conspiring to send the market on a downward spiral - 100 cents fall over the past 6 weeks. The large offerings and inability of buyers to deliver wool on time is severely hampering normal buying and shipping activities. This week was, in effect, the final opportunity to ship wool to China for arrival before their New Year shutdown so the large offering at this time is bad timing for exporters and mills. This means a 2 to 4 week additional financing period that is required for exporters for any wool destined for China that is bought over the next 2 sales if delivery is not “prompt”, one week for shipment delay due to Christmas and up to 2 weeks for the Chinese New Year shutdown. The margins are tight at the best of times let alone this situation when hand to mouth modus operandi that all the trade use.

AWTA released their November figures which saw a 1% fall when compared to the same month last year with the progressive total for the year running at 8.5% less wool tested than last season (127.5mkg to 139.4mkg) and 77,175 (10.5%) less bales offered than last season. Next week’s sale (48,500) could be the largest since end of April growing by 9,000 bales (23%) since last Friday, Melbourne’s catalogue ballooning by a massive 27%.

Southern Aurora Fwd Prices              

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 29th November, 2019

 AWEX Northern Micron Indices Comparison

MARKET STALLS!!

The recent pattern of price movement was broken this sale as the “up and down” direction over the past 6 to 8 weeks shifted to a falling trend now into its 5^th selling day (a 50 cent reduction). Last week’s Thursday firming market in Fremantle gave a false hope that the market would tract upwards but that wasn’t to be. Steady falls over both days saw the AWEX EMI fall by 25 cents to 1530, a similar margin (22 cents) in US$ terms to 1035 despite the FRX falling by 0.30 of a dollar to 67.65 cents - a worrying sign when the market falls and the FRX goes in our favour.

All fleece types fell as all microns gave up 15 to 35 cents with the poorer style types (MF6/7) neglected even more by 50 to 80 cents. Only the very best style (MF3 and better) and NM lots were immune from the discounts. After a few sales of maintaining levels skirtings suffered losses of 30 to 50 cents except < 2.5%VM which halved those falls. All types in the Carding sector were fully firm to sellers’ favour and XBs recorded losses on both days to finish 30 to 45 cents off the pace.

Signs of weaker demand are coming to bear at the present time which is critical for the Autumn/Winter retail season in the Northern Hemisphere. Current price trends and the level of consumer confidence are reflecting the uncertain economic conditions in many countries. Many EU economies have weakened over the past 12 months as consumer confidence wanes there as well in Japan which is at its lowest level for 7 years and worst since 2017 in South Korea. On the flip-side US consumers remain upbeat with low unemployment, a strong economy and wages increasing and stronger consumer confidence in China - a welcome turnaround from low economic growth and the trade war impact with the USA.

More news from the AWI AGM: The main item was the ousting of one-time Chairman and long term director Wally Merriman. The board also announced a further reduction in expenditure and draw down of a further $7.5 million from its reserves due to the less than anticipated levy revenue as a result of less wool being sold, lower prices and the levy % down to 1.5% from 2% which started July this year. The board has also commissioned a review of WoolQ (the platform that has cost several $million). Over 41,000 bales are on offer next week giving the buyers too much of a chance to take a “pick and choose” approach to the market.

Southern Aurora Fwd Prices              

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 22nd November, 2019

 AWEX Northern Micron Indices Comparison

SAME OLD, SAME OLD ……

The recent pattern of “up and down” for the wool market continued on this series as the AWEX EMI slipped by 19 cents to 1555 - the exact amount of the previous week’s gains. In $US terms the downward shift was a similar figure, a 13 cent loss to 1057 as the FRX moved above 68 cents on Wednesday only to fall back below that level today. Last Thursday’s falling market was the precursor to this sale as falls across the 3 centres on Wednesday were followed by a more positive tone in the final session. All fleece microns suffered, falling by 20 to 40 cents with only the very odd best type or NM lot attracting any sort of premium up to 60 cents. Skirtings again looked to be far less affected by the ebb and flow of demand of their fleece counterparts and sold to sellers’ favour. Cardings also had an uneventful sale with some types in buyers’ favour to have the MCI shed just 1 cent. Crossbreds followed last sales pattern shaving up to 10 cents from their values.

The current price movement of the market continues on. The practice of exporters writing some new business and  buying wool and pushing up prices by 50 to 80 cents then being in the situation of the market going “too high too fast” has them immediately on the back foot and prices retract just as quickly as they were pushed up. The price fluctuation over the past month or so has been around 40 cents (1550 to 1590) as the EMI has been unable to break through the 1600 cent mark. When it does and if that level can be maintained is anyone’s guess.

The Australian Wool Production Forecasting Committee met this week and downgraded its shorn wool production for this season to 272mkg a 9.2% decline from 2018/19, the lowest since 1923/24. The 2 main reasons for this decline are higher slaughter rates (resulting in record prices for lamb and mutton) due to increased demand for red meat caused by the global outbreak of African Swine Flu which has resulted in 25% of the world’s pig population eradicated; and the persistent drought lowering numbers to 67 million, a 7.5% fall from 2018/19.

AWI held their AGM this morning and voting was conducted for the 3 vacant spots on the board. Of the eight candidates up for election, 2 new directors were voted in (Michelle Humphries and Noel Henderson) with incumbent director, David Webster, holding his position. One time Chairman, Wally Merriman, failed in his bid to be re-elected and Haddon Rig principal, George Falkiner, also was unsuccessful in his bid for a spot on the board. Fremantle’s firming market on Thursday bodes well for next week’s sale but how much will it rise??

Southern Aurora Fwd Prices              

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 15th November, 2019

 AWEX Northern Micron Indices Comparison

JUST LIKE A BROKEN RECORD!!

The wool market continues to do the same thing, up and down, this time over the very short period of this week’s sale as the sale started with a bang and lost ground on the final day. Since September the pattern has been 2 or 3 days of gains followed by losses over the same period of time. Again it was a case of “rising too high too quickly” as most fleece types ascended by 45 to 65 cents only to lose up to 20 cents in the last session. By week’s end the AWEX EMI had lifted by 19 cents to 1574 with just a 2 cent rise in US$ terms to 1070 as the A$ lost ground to all major currencies to fall below 68 cents with all microns adding 35 to 50 cents across the merino fleece spectrum. Skirtings fared better than their fleece counterparts as the opening day’s lifts were maintained to see a 30/40 cent gain for all types with the < 17.5, low VM lots 40 to 60 cents to the good. Cardings recorded very little change as LKS were in buyers’ favour to have the MCI give up 2 cents to 1053. Crossbreds also had a flat sale as > 27 micron fell by 10 cents with all other types firm.

The market is like a broken record doing the same thing week after week but the volatility of price shifts has narrowed. In August/September the shift was 100 cents or more but the past 6 sales has seen the EMI move either way 25 to 40 cents bar one rise over 2 weeks that added 75 cents, this narrowing price adjustment much more palatable for buyers.

Volatility remains the bugbear of all in the processing pipeline. Exporters’ margins are savaged by the magnitude of the daily price shifts leading to a conservative “just in time” approach if they can’t cover their forward risk. This, in turn, reduces efficiency in the pipeline and disrupts a smooth flow of product which can constrict consumer demand.

Australian buying houses led the way followed by Chinese indent buyers and selected top-makers but, as the opening day’s levels rose beyond downstream users’ comfort zone, the inevitable pull back in price saw support drift on the final day seemingly now making the 2/3 weekly changes closer to erratic daily swings of price.

The AWI AGM will be held next Friday. Voting closes for the 3 spots on the board next Wednesday at 10am. Postal votes should be in today’s mail with online voting open up until 10am, Wednesday. The AGM will be webcast, go to www.wool.com/about-awi/how-we-consult/annual-reporting/ to watch. The scheduled 40,000 bales rostered for next week and the softer market on Thursday might put prices under pressure to hold their levels.

Southern Aurora Fwd Prices              

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 8th November, 2019

 AWEX Northern Micron Indices Comparison

THE SAME PATTERN CONTINUES!

The market kept going on its rollercoaster ride this sale as predictions of a cheaper market after the opening day last week rang true as the quick price ascent was never going to be maintained. The previous 3 sales before last week’s big rise had seen the market average a 29 cent shift either way which, to all participants in the trade (most importantly processors), was quite acceptable and business was done without too much angst for grower or processor. Last sale’s rapid rise and the FRX upward shift put paid to this week’s market from the opening lot as the cheaper market in Fremantle last Thursday was a precursor.

The saving grace for sub 18.5 micron was based purely on the superior style types on offer for this week`s designated superfine sale with only the very odd lot attracting solid premiums with most falling by up to 50 cents. 19 micron and broader took the brunt of the losses, most microns giving back 70 to 80 cents more than last week’s gains. Skirtings weren’t as adversely affected as low VM types lost 10/15 while poorer, burrier lots fell by 20/30 cents. After last week’s massive lifts cardings losses were minimal, all types in this sector retracting by 10 to 20 cents bar carbo LKS, back by 30\50 cents. Crossbreds also came under demand pressure to contract by 30 to 60 cents - not quite all of last sale’s gains.

So the rollercoaster continues. The market cannot seem to crack the 1600 cent barrier – has reached 1594 cents last sale and back to 1555 this sale, a loss of 39 cents. The AWEX EMI has been stuck in the 1500 cent range for some time now and buyers are unable to let it go to 1600 and beyond. Is this level comfortable for processors? At the moment it does look as though1600 cents is the upper limit they can operate at and sell to downstream users where everyone is making money. The erratic rises and falls hurt all pipeline participants as we have seen since August. Up or down the staircase is far better for all to operate in rather than the elevator speed that the market has been on in some weeks since sales resumed in August.

As has been the case for some time Fremantle’s Thursday market dictates what will happen next week and the solid market yesterday (up by 10 cents) gives hope that the market should be solid to sellers’ favour next week if recent history is any sort of guide. Just a reminder that all who are eligible to vote in the AWI elections must send their postal voting papers by next Friday to arrive by the cutoff date. If voting via email votes must be submitted by Wednesday 20^th November. Directors urge everyone to vote.

Southern Aurora Fwd Prices              

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 1st November, 2019

 AWEX Northern Micron Indices Comparison

NUMBERS LOOK GOOD BUT VOLATILITY TO CONTINUE!!

The promise of a dearer market late last week was spot on as buyers chased wool from the opening lot. Sydney’s market had to play catch-up after its 1 day sale last week but all centres rose more than expected as all fleece microns gained 50 to 75 cents on the opening day then leveled out on the final day. Skirtings had an excellent sale as broader types jumped 40/50 cents while < 18 micron climbed by 70 to 90 cents. XBs also benefitted from the increase in demand up by 60 to 80 cents while the MCI added 100 cents as all types in this sector skyrocketed by 80 to 110 cents.

While any rise in any commodity is welcome, price volatility is always a concern as the past 12 weeks has demonstrated. This sale’s rise was widely tipped but after the opening day’s rises most talk was “gains went too high too fast” and  the shift in the FRX to well above 69 cents was too much as Fremantle’s market pulled back by 20 cents on Thursday - a certain sign of things to come here next week. The sudden upward shift in the A$ came after the first phase of a trade pact with China and the US could be signed ahead of schedule and the US Federal Bank dropped interest rates to 1.5% which resulted in the US stock market setting a new record high. The widely volatile market has auctions highly reactionary to immediate demand (both positive and negative) as buyers don’t want a heavily exposed open position and execute purchasing promptly without price limitations. The +/- 20 cent movements over the previous month has had both sides of the trade (buyers & sellers) confident in what they were doing but the big shift in prices makes trading difficult.

The end of the month saw the release of testing figures from AWTA. October saw a 4.2% fall compared to last October and the progressive total from July to now is 11% less than the same period last year. The volume of wool offered for the current season is 16% (89,400) less than last season - these figures certainly not to improve any time soon. AWI AGM will be held in 3 weeks and voting is under way for the 3 vacant positions on the board from a field of 8 candidates. All shareholders eligible to vote should have received their voting papers by now (electronically or by mail) and are urged to vote from now. If you cannot attend the AGM you will need to appoint a proxy for the meeting. Don Macdonald will be happy to again carry your proxy in what will be a very important election of 3 new board members. As we mentioned earlier we could see a cheaper market next week.

            Southern Aurora Fwd Prices

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 25th October, 2019

 AWEX Northern Micron Indices Comparison

MARKET SHOWS SIGNS OF MEASURED RECOVERY

The market’s current yo-yo movements kept going this week with an upward trend as last sale’s falls were recovered. The positive tone from last Thursday flowed through for 2 days of solid rises for the AWEX EMI for a gain of 28 cents to 1545 and an identical rise in US$ terms to 1058. The AUD/US$ has been trading in the mid to high 68 cent bracket for 2 weeks after trading in the 67 cent range for a month before that but these fluctuations seem not to be influencing the market with everything else going on and are having very little effect on price direction. Gains for fleece types were pretty even - 15 to 35 cents for all microns. Skirtings added 10/20 cents while cardings remained firm and XBs added 10 cents for < 27 and fell 10 cents for 28 and coarser.

Consensus amongst buyers is that the change in sentiment along the pipeline that these price levels are more and more acceptable as the past 3 weeks of sales have shown and hopefully the erratic price movements of August/September are just a memory. Global economies look to be swinging to more positive outcomes with early autumn sales hopefully showing that Northern Hemisphere consumers are ramping up their spending. If Britain and the EU can resolve their differences, the UK can avoid a general election, resolve the Brexit issues quickly and the China/US trade war dies down global economies could dodge the bullet (Recession) everyone fears. A significant factor in the market’s dearer trend was the largest Chinese top-makers ramping up their buying after a quiet month or so. This could be an indication that the backlog of tops to spinning stage wools is clearing where cash flow has been tight due to delays in the uptake of contracts.

Ram sales are finished in this part of the state with the focus now down south. The Henderson family from Grogansworth stud at Yass cleared 87% for a top price of $8,000 to average $2205; Egelabra at Warren had a 100% clearance (146) to average $2,700 with a top price of $18,000; Glenwood at Wellington gained a top price of $5,800 to average $2,215 for an 89% clearance; and Hazeldean held their Hay sale to sell all but 2 of the 110 rams offered with a $2,600 average and a top price of $6,500. All the showfloor talk is of a solid to dearer market despite the largest selection since early August.

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 18th October, 2019

 AWEX Northern Micron Indices Comparison

MARKET HOPEFULLY HAS FOUND THE LEVEL!

The volatile nature of the market is still well and truly in play as price levels of last sale couldn’t be maintained this week but the degree of fluctuations not as bad (or good) as some over the past 6 weeks. The market opened on a softer note as the 3 centres fell but Fremantle did stage a late recovery on Wednesday. This flowed through to the eastern seaboard on Thursday as minor gains were recorded. By the end of the sale the AWEX EMI fell 26 cents to 1517, < 17.5 were in buyers’ favour while 18s and broader lost 20/40 cents. Skirtings followed a similar pattern to their fleece counterparts to finish the sale 20 cheaper. Cardings were the least affected sector as LKS/STN lost 10 to 20 cents while XBs retreated by 10 to 40 cents.

Trading looks to have returned to somewhat of a normal pattern as the EMI has settled just above 1500 cents - hopefully a bottom level of the market as writing business seems to be easier than a month ago but price movements are still largely driven by supply both for volume and wool types. The acceptance of these prices is widespread as most mills are committed to strategising loss-recovery plans from the hectic financial results caused by the dramatic downturn in price with sentiment at the other end of the wool textile chain still subdued.

Could the global economy be showing signs of recovery?? Now that Brexit is locked in to go ahead without any more hiccups and the US-China trade war not as bullish as the rhetoric may have sounded world economies might have dodged a bullet. Retail sales in China rose by 0.7% in August compared to 12 months ago and their trade surplus increased to US$40 billion in September, up by US$9 billion from September, 2018, putting the yearly trade surplus up to US$300 billion, $80 billion higher than the same period last year. Chinese exports did however drop by 3% but were offset by an import reduction of 8%. Their growth in retail sales is good news for woolgrowers as they buy 75% of our wool of which 45% is sold as woolen products in China, putting them at no1 for the largest consumer of wool in the world.

Next week has 33,000 bales on offer with only enough wool in Sydney for a 1 day sale as some growers hold onto their wool waiting for a dearer market and those who have passed-in wool wait for the market to recover up to that level or better. Going on Thursday’s dearer trend we hope the market can keep moving upwards.

Southern Aurora Fwd Prices         

Main Buyers (This Week)