Weekly Market Reports


18 December 2020

Friday, December 18, 2020

 WEEKLY MARKET REPORT

Week Ending 18th December, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S25/20

This Week

M25/20

Last Sale

S24/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1871

1865 1903
-32 2005 -134

18

1578

1570

1623

-45

1907

-329

19

1390

1392

1442

-52

1818

-428

20

1249

1248

1300

-51

1792

-543
21 1180n 1181 1230n -50 1783n -603
 26 710n 728n 740n -30 1180n -470

28

460n

469

500n

-40

914n

-454

MC

764n

778n

765n

-1

1071n

-307

ANNUS HORRIBILIS BUT … HAVE A MERRY CHRISTMAS!

As the Queen stated at the end of 1992 the year has been “annus horribilis”. The collapse of her 3 children’s marriages and the near total destruction of the much beloved Windsor Castle prompted this statement from her. Fast forward 28 years and the same could be said for 2020 on so many fronts. From devastating bushfires and the continuing drought early in the year and floods that broke the drought and floods now to Covid-19 spreading like wildfire across the globe claiming 1.66 million lives and infecting 75.270 million people on the planet. This year has been like no other in many generations. The wool market continued to be erratic right till the final sale this week. The market gave back nearly all of last series’ gains as the AWEX EMI fell by 41 cents to 1157 the majority of the losses coming in the opening session. The losses in US$ terms was less than half in A$ terms, just 18 cents to 874, this due to the ascending A$ up above 76 cents this morning (a 3 year high against the greenback) a worry for exporters of raw materials. Finer fleece microns < 17.5 fell by 15 to 30 cents with 18s and broader dropping by 45/50 cents. Fine skirtings < 17.5 micron opened cheaper but found solid support in the final session to finish the sale up to 10 cents dearer while the coarser types lost 35 to 55 cents down. There was very little movement in the Carding sector as the MCI lost just 1 cent to 764 with the 3 centres’ MCIs well and truly aligned, 778 to 764. Crossbreds followed the merino combing market to fall 25 to 40 cents for all microns. The passed-in rate blew out to 18%. The big, anticipated offering of 49,000 bales didn’t eventuate with 44,800 being offered (9% withdrawn) combined with the high passed-in rate saw just 36,600 bales sold. One highlight was the highest price in Sydney on our sale day, (3rd highest for this week’s sale and 7th highest in Australia this week) was achieved by one of our Carmichael clients, Carla & Darren Hepburn from Delegate, a 2 bale line of 14.9 micron-0.3VM-72.5yld, 90mm-26nkt made 1898 to be processed by Raymond Industries in India.

The EMI level of 1157 is 401 cents below last Christmas’ price of 1558, back by a whopping 25.7%. The year’s peak was in the opening sale of the year in January when it climbed to 1609 with the low point of just 858 cents in early September, a massive swing of a 47%. The volatility seen over many weeks of this year (in particular these last 6 months) has been unprecedented. The largest weekly drop was 155 cents in late March, 1442 to 1287, followed by a 128 cent fall in the resumption of sales in August. The biggest weekly rise was in October when the EMI climbed by 102 cents to 1219. The sale the previous week before saw a 95 cent leap, 197 cents for the fortnight!! Added to this was the disruption to the main software provider, Talman, in February resulting in the cancellation of Sale 35. All of this combined the challenges that the pandemic brought with it that came very close to having wool sales cancelled in Melbourne and all centres adhering to tight government health regulations with non-essential staff and no clients traveling to wool sales and reps unable to visit shed starts added to the pressure of selling wool in very uncertain times.

The wool market was coming off the “Super-cycle” but was exacerbated by the complete collapse in demand once the pandemic took hold. China is showing signs of recovering but our other major wool users have been much slower. The release of vaccines and more to come will give Northern hemisphere governments the confidence to lift lock-downs and restrictions and a return to normal work and consumer spending habits will help get demand for wool back to a good level. Sales are in recess till week of 11th January. We hope everyone can enjoy a great Christmas and New Year break.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Mar/Apr 21

1150

Main Buyers (This Week)

1

Techwool

5227

2

Endeavour Wool

4316

3

Tianyu Wool

4057

4

Modiano

2192

5

United Wool

1911

6

Fox & Lillie

1887

Eastern Market Indicators (AUD cents/kg clean)

1157 cents ê 41 cents compared with 11/12/2020

Northern Market Indicators (AUD cents/kg clean)

1218 cents ê 39 cents compared with 11/12/2020

   AUD/USD Currency Exchange

0.7552 é 0.0109 compared with 11/12/2020

11 December 2020

Friday, December 11, 2020

 WEEKLY MARKET REPORT

Week Ending 11th December, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S24/20

This Week

M24/20

Last Sale

S23/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1903

1918 1826
+77 1925 -22

18

1623

1638

1554

+69

1815

-192

19

1442

1454

1382

+60

1723

-281

20

1300

1290

1240

+60

1708

-408
21 1230n 1235 1178n +52 1705n -475
 26 740n 759n 723n +17 1120n -380

28

500n

503

480n

+20

840n

-340

MC

765N

763N

740N

+25

1040N

-375

MARKET RISES 2 DAYS RUNNING!

The penultimate sale of the year finally delivered some good news for growers as the market strung together 2 consecutive days of gains, something it hadn’t done since mid-October. The AWEX EMI climbed by 54 cents (4.7%) to 1198 - its highest point since early November. The rise was more impressive in US$ terms with the market adding 47 cents (5.7%) to 892 as the FRX steadily increased over the week to sit at 74.40 cents (a 1% rise). The market is at its highest point since early March in US$ terms. The market started off on a dearer note following on from the positive sentiment in last sale’s final session. Competitive tension was ramped up on the final day to see prices go higher as all fleece microns added 50 to 75 cents for the week. The market cleared 98.5% of the fleece on offer to have just 75 bales unsold. Skirtings also benefitted from the renewed competition as finer < 18.5 micron and low VM (< 1.5) types lifted by 80 to 100 cents with broader lots gaining 40 to 60 cents. Growers again were happy with the rising market as just 35 bales failed to sell - a 98% clearance rate. Cardings continued their recovery as < 17.5 micron LKS, STN and CRT lifted by 40 to 60 cents with broader types being quoted 20/40 dearer. The collapsing XB market was halted as gains ranged from 20 to 40 cents - a welcome lift after the month long battering they’ve taken. The 37 cent gain for 32 micron equated to a 15% rise!!

This week’s sale was the final opportunity for buyers to buy and, more importantly, ship wool before Christmas. This sense of urgency was evident from the outset and lasted through to the final lot knocked down in Fremantle. Topmakers and traders dominated the buying lists with indent buyers less active. Indents are usually volume based and the lack of normal buying % is indicative of some semblance of price sensitivity being reached. Trader may have met factories’ needs with price surety rather than indenting the next day. The promise of a Covid-19 vaccine has finally arrived with the first vaccinations administered in the UK this week. Russia has been vaccinating for a few weeks but without any medical approval that would stand up in the West. The FDA in the US is set to approve 2 more vaccines anytime now and vaccinations will commence there before Christmas. This will come as a great relief to planet Earth. As lockdowns and social distancing are wound back people will be able to resume work and re-engage with their shopping urge. This will be more than welcome by retailers who have been sweating on consumers getting back into shops and spending money again. What effect will this have on the demand for wool?? An increase hopefully and sooner rather than later. Many buyers have spoken about how much and when the button is pushed for an increase in demand that filters through to greasy wool prices making a comeback. Their opinion of price rises is hundreds of cents apart. Time will tell. Will wool be caught up in the current trade spat between China and Australia?? The advantage we have is that we grow 80% of the world’s merino wool with South Africa, Argentina and Uruguay supplying the rest. The other crucial commodity they need is Iron ore. It also has failed to be mentioned in regards to higher tariffs.

Next week sees the final sale of the year. The national catalogue climbs to 49,000 bales (the largest since early March), up by 10,000 on this week which was the biggest in 8 months. This bigger offering is a result of the lifting market this week and growers wanting to sell before the 3 week Christmas recess. Market might open on a cheaper note but may strengthen on the final day. A good result given the size of the offering and the trades angst to absorb a catalogue well over 40,000 bales.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Mar/Apr 21

1200

Main Buyers (This Week)

1

Techwool

5427

2

Endeavour Wool

4213

3

Tianyu Wool

3889

4

Fox & Lillie

2891

5

Aust. Merino

2319

6

Lempriere

1439

Eastern Market Indicators (AUD cents/kg clean)

1198 cents é 54 cents compared with 04/12/2020

Northern Market Indicators (AUD cents/kg clean)

1257 cents é 49 cents compared with 04/12/2020

   AUD/USD Currency Exchange

0.7443 é 0.0063 compared with 04/12/2020

4 December 2020

Friday, December 04, 2020

 WEEKLY MARKET REPORT

Week Ending 4th December, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S23/20

This Week

M23/20

Last Sale

S22/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1826

1804 1844
-18 1908 -82

18

1554

1574

1560

-6

1808

-254

19

1382

1373

1377

+5

1706

-324

20

1240

1241

1234

+6

1683

-443
21 1178n 1169 1188n 0 1681n -503
 26 723n - 768n -45 1135n -412

28

480n

484

490n

-10

833n

-353

MC

740n

731n

734n

+6

1061n

-321

A VACCINE APPROVED!!

Once again the wool market followed a similar pattern of previous sales, volatile but on a much smaller scale. The market is looking for some defined direction but is unsure of which way to move. The big price swings that we saw in October and November have shrunk to minimal movements with the AWEX EMI down to single figure adjustments over the past 2 sales. The EMI lost 6 cents this week to finish at 1144 and, in US$ terms, the fall was identical to the gain of the previous sale (2 cents to 844). The FRX has risen over the course of the week to now sit above 74 cents. The market opened on a cheaper note but did firm up in the final session to have 19 micron fleece and broader in sellers’ favour with 17.5 to 19 5/10 cheaper and < 17 giving back some of last sale’s gains to fall 15 cents coming off the designated superfine sale, this buying strategy almost standard procedure. Skirtings sold to a similar pattern to the fleece but did finish the sale fully firm to 10 cents dearer. Cardings had a very solid sale with all types quoted as firm/unchanged except low VM (< 2%) LKS finer than 17.5 that were 30 to 40 cents higher. The crossbred sector continued to get cheaper as finer than 27 micron fell by 30 to 40 cents with the broader types unchanged. This sector of the market has fallen quite rapidly over the past 3 weeks with 26s making around 400 cents, 28s about low to mid 300s and a 30 micron fleece lot only mid 200s (based on 70% yield, < 2% VM). Crossbreds again made up the bulk of passed-in lots as the overall number was similar to last sale at 10%.

Buyers were reporting business enquiry and conversion to new orders was down a fraction on the week before thus the softer market on the opening day. It only took this slight price adjustment down to a level where exporters were more comfortable to be able to turn enquiry into sales. As a result most types were dearer and all buyers reported the final quotes that were sent to clients and mills were in fact higher than prices at the start of the sale but, with the averaging of individual lots not based on time period, the MPGs and indicators were not reflective of the closing levels. Purchases were evenly spread between processors, traders and indent operators.

As has been the case for several sales the anticipated national volume didn’t go close to what was finally offered. A look at the last 6 weeks of sales has an average of 12% of the initial offering withdrawn before sale. This, coupled with the passed-in rate that is averaging 15%, doesn’t leave a massive amount of wool that is actually sold to the trade.

The big news of the week has to be the emergency approval of a vaccine in the UK. The whole planet had been waiting for the past few months to see when and where the first approval would be. Vaccines will be rolled out as early as next week to the most critical in need, frontline medical workers and the elderly. This should be followed by the approval of 2/3 more vaccines before Christmas and vaccination programs to start in earnest early in the new year. This should have an immediate positive effect on the global economy as lockdowns and restrictions are wound back and people can go back to some form of normality pre Covid. As we can see in Australia the economy rebounded by a record level in the September quarter compared to the horror June quarter and the price of airline tickets and accommodation has trebled in the past 2 weeks as state lockdowns were eased. Hopefully this good news will see a genuine lift in global consumer spending in the new year on all goods including woolen clothing and products. According to all the good judges on the showfloor the market should be stable next week.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Mar/Apr 21

1120

Main Buyers (This Week)

1

Techwool

5371

2

United Wool

3016

3

Endeavour Wool

3006

4

Tianyu Wool

2936

5

Lempriere

2175

6

Aust. Merino

1011

Eastern Market Indicators (AUD cents/kg clean)

1144 cents ê 6 cents compared with 27/11/2020

Northern Market Indicators (AUD cents/kg clean)

1208 cents ê 1 cent compared with 27/11/2020

   AUD/USD Currency Exchange

0.7380 é 0.0023 compared with 27/11/2020

27 November 2020

Friday, November 27, 2020

 WEEKLY MARKET REPORT

Week Ending 27th November, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S22/20

This Week

M22/20

Last Sale

S21/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1844

1824n 1806
+38 1980 -136

18

1560

1576

1570

-10

1863

-303

19

1377

1378

1386

-9

1744

-367

20

1234

1231

1229

+5

1713

-479
21 1178n 1167 1188n -10 1716n -538
 26 768n 783 798n -30 1168n -400

28

490n

488

559n

-69

855n

-365

MC

734n

746n

704n

+30

1054

-320

OUR RELIANCE ON CHINA GROWS!

This week’s sale played out as the several sales beforehand have done in regards to volumes and withdrawn wool and passed-in rates. The anticipated national catalogue of 41,500 bales never eventuated with 12% (5,000 bales) withdrawn prior to auction and, with a flat market, the passed-in rate dropped to 12% from 19% last series to have just 32,000 bales cleared to the trade - hardly a supply overload. For the 2nd time in the last 3 sales the AWEX EMI was restricted to single figure movements, just a 9 cent fall to 1150. With the strengthening FRX to 73.50 cents the market added 2 cents to its value in US$ terms to 846. It was a tale of 2 markets as merinos were mostly unchanged to dearer while the XB sector fell out of favour to suffer big falls. The fleece market started on a cheaper note but did finish the sale strongly with the inferior style types with poor test results (low yields, tender, high mid-breaks and high CVHs) dragging some MPGs into the red. With a designated super-fine sale in Sydney the superior offering saw 17 micron and finer add 25 to 40 cents and more (60/80) as the style improved while all other microns were 15 cheaper to sellers’ favour. All descriptions of skirtings added 10/20 cents from the previous series while cardings recovered all of last sale’s losses as all types in this sector climbed by 15 to 60 cents, the MCI adding 30 cents to 734. Crossbreds were the disappointing sector of the sale and directly contributed to the EMI losing ground. Finer than 26.5 micron fell by 30/50 cents while the broader types were hammered losing 50 to 80 cents with some individual microns falling by over 15%. Buying interest was from across the board from processors to indent operators and traders. When prices lowered or were filled in the opening session there was a quick buyer replacement that stepped in to maintain good competition and price levels indicating a strong book of orders for now.

Have we come to a new price level?? Taking out last week’s 30 cent fall the market, either side of that has barely moved. For the moment the wild volatility seems to have gone but the past 5 sales (10 auction days) has seen the EMI move 560 cents (up and down) a daily average shift of 56 cents. Over the past 3 weeks though the EMI has moved between 1189 and 1150, a 39 cent movement and taking out 2 days when the EMI was at 1188/1189 the shifts have been restricted to 1150 to 1161, a very tight price range.  What does this mean? Have we reached a price point that the wool pipeline is happy with and can all successfully pass on prices at a profitable level? Or are we in a holding pattern till the next upward shift (fingers crossed) or will  the 2nd wave of the pandemic in Europe and the seemingly out of control status in the US stifle demand  due to lockdowns and falling retail activity just when they are on their knees begging for some sort of global Christmas spending recovery. Or will health authorities give the green light to the 4/5 vaccines that are trialing with 70 to 90% success rate. There are reportedly 10s of millions of doses already produced awaiting approval - some maybe before Christmas. We can only hope.

Our reliance on China as a market this season has grown with them now taking 83% of the clip with the next 3 countries (India, Italy and South Korea) buying 8%. The recent “Singles Day” online shopping extravaganza saw $115 billion of merchandise change hands on just 2 major platforms - Alibaba and JD. Hopefully there is some restocking of retail shelves to happen. The importance of the well-heeled Chinese consumer has never been more important. Their woolen clothing purchases for 2019 of 125mkg is more than the next 3 countries combined, USA, Japan and Germany at 115 mkg. Next week’s offering of 41,800 will not make it to auction unless the market finds a new level.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Mar/Apr 21

1120

Main Buyers (This Week)

1

Techwool

4916

2

United Wool

3168

3

Endeavour Wool

3078

4

Fox & Lillie

1896

5

Aust. Merino

1803

6

Tianyu Wool

1659

Eastern Market Indicators (AUD cents/kg clean)

1150 cents ê 9 cent compared with 20/11/2020

Northern Market Indicators (AUD cents/kg clean)

1209 cents ê 5 cents compared with 20/11/2020

   AUD/USD Currency Exchange

0.7357 é 0.0071 compared with 20/11/2020

20 November 2020

Friday, November 20, 2020

 WEEKLY MARKET REPORT

Week Ending 20th November, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S21/20

This Week

M21/20

Last Sale

S20/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1806

1824n 1845
-39 2008 -202

18

1570

1578

1605

-35

1885

-315

19

1386

1376

1413

-27

1781

-395

20

1229

1228

1278

-49

1738

-509
21 1188n 1174 1226n -38 1729n -541
 26 798n - 838n -40 1200n -402

28

559n

561

600n

-41

899n

-340

MC

704n

768n

731n

-27

1052n

-348

PRICE DIRECTION IS ANYONE’S GUESS!!

The wool market didn’t quite go to script this week as sentiment changed from late last week to pre-sale. Futures trading indicated par to +20 but most exporters were talking the market down before the sale commenced. The talk was spot on as the opening session had all fleece microns giving up 30 to 50 cents. The final day saw a distinct change in sentiment as the market steadied to see some types in sellers’ favour to finish the sale 20 cents lower than the previous week.  Skirtings couldn’t do what the fleece sector did with no second day recovery as falls over the entire sale saw all types and descriptions drop by 40 to 70 cents. Cardings continued to fall as fine LKS < 17.5 micron gave up 65/80 cents with the broader types and CRT & STN 20 to 40 cents cheaper. The MCI lost 27 cents to sit at 704 - the 4th week in a row it has lost ground from the 811 cent high in October - a 107 cent reduction. Crossbreds also continued to lose ground from their highs of 4 weeks ago. All types from 25 to 32 micron fell by 30 to 60 cents and now all about 100 cents from the peak of a month ago. The A$ finished the sale slightly lower than where it was early in the week (73.25), this a factor in the softening prices on the opening day coupled with the anticipated 40,500 bale offering. The AWEX EMI fell by 30 cents to 1159 and lost 24 cents in US% terms to 844 cents.

Most prompt orders had been seemingly covered by exporters last week to leave buyers in a “holding” pattern early in the sale as they waited on a clear price signal from overseas or new business to be written or the market to fall to  new bid levels that downstream users would be happy with to negotiate new business at these price levels. The final days’ price stability coming from a conservative purchasing mode to buy to price advantage rather than accumulate inventory. One of the large Chinese topmakers (Tianyu) looked to ramp up their buying of merino fleece this week to dominate with 20% of the offering, with the next 2 buyers on the list securing 21% between them (Techwool and Endeavour). Traders and 1st stage manufacturers kept pace with the dominant topmaker in the opening session but was outgunned on the final day. Once again the volume of wool to be offered and what actually made it to sale and eventually sold again were worlds apart. The original offering of 40,500 bales failed to make it to auction with over 10% (4,200) withdrawn and, with the falling market, 20% was passed in leaving 29,100 actually sold to the trade. General consensus is that a figure of 40,000 bales/week is enough for current demand to handle but anything over this becomes problematic for exporters to handle. Only 4 sales this season have had a predicted national catalogue of over 40,000 bales and the end result being 10/15% withdrawn and the largest catalogue adding up to 37,500 bales. Next week should be the same with 41,500 rostered but about 37,000 to be actually offered. Surely the Chinese must realise now that the anticipated volume never makes it to sale. Market direction is anyone’s guess depending on which price pattern is followed - weekly or daily movements.

The Responsible Wool Standard (RWS), a farm certification system, has been a growing force in the marketplace of recent times. Big name European and American brands are not only asking for non-mulesed but requesting it with RWS certification. On behalf of our clients we have joined with the Schneider Wool of group of Italy and this week we were the first to be audited in the group’s scheme which includes a couple of other brokers from other regions and states. Around a dozen clients have signed up with the remaining audits to happen between now and Christmas.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Jan/Feb 21

1120

Main Buyers (This Week)

1

Tianyu Wool

4116

2

Techwool

3286

3

United Wool

3174

4

Endeavour Wool

2551

5

Lempriere

1779

6

Aust. Merino

782

Eastern Market Indicators (AUD cents/kg clean)

1159 cents ê 30 cent compared with 13/11/2020

Northern Market Indicators (AUD cents/kg clean)

1214 cents ê 38 cents compared with 13/11/2020

   AUD/USD Currency Exchange

0.7286 ê 0.0021 compared with 13/11/2020

13 November 2020

Friday, November 13, 2020

 WEEKLY MARKET REPORT

Week Ending 13th November, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S20/20

This Week

M20/20

Last Sale

S19/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1845

1838 1808
+37 2027 -182

18

1605

1570

1578

+27

1920

-315

19

1413

1391

1393

+20

1818

-405

20

1278

1259

1259

+19

1773

-495
21 1226n 1225 1208n +18 1763n -537
 26 838n 840n 838n 0 1204n -366

28

600n

613

615n

-15

910n

-310

MC

731n

781n

764n

-33

1053n

-322

DAY-TO-DAY VOLATILITY – UNHEARD OF!!!

When looking at the market reports for this week’s sale the barest movement in the AWEX EMI of just one cent ascendency to 1189 would suggest the market was pretty stable, something that both sides have been seeking for some time. A closer look at actually what happened tells a very different story. After the final day’s cheaper trend in the last series (if previous weeks’ patterns were any guide), this week’s market was going to be falling by some major margins. By the time the opening lot was due to be sold this savaging of the market was not going to be as bad as was first predicted with spatterings of business done. Fleece prices ranged from 20 to 50 cents back in the first session (showfloor chatter had the losses between 60/80 cents). The final day of selling brought hope of a recovery as Fremantle’s market barely moved and finished par to 20 cents higher than the Eastern Seaboard prices on the opening day. All centres recorded good gains to finish the sale on a strong note. 18.5s could only manage a 1 cent gain for the week while all other microns rose by 20 to 40 cents and, in some cases, a 100 cent turnaround from day to day in identical types. As mentioned earlier it was just a 1 cent gain to 1189 for the EMI. In US$ terms the rise was 16 cents to 869 due to the global strengthening of the greenback on the US election result. Our FRX was up by 2% to 73.10 cents but this didn’t seem to adversely affect the market. Skirtings finished to the good after the roller-coaster ride like the fleece wools. Finer types < 17.5 finished the sale on a firm note with broader lots 10/20 cents higher than the previous sale.  Cardings, unlike their merino combing counterparts, had failed to recover their opening day’s losses with most types falling by 20 to 30 cents. The MCI gave up 33 cents to 731. This large loss for cardings the contributing factor the EMI could only add 1 cent. Crossbreds also couldn’t recover all the opening session’s losses with 26 micron and finer unchanged and broader microns back by 20 to 30 cents for the sale.

The volatility continues unabated not from week to week but, for the past 2 sales, day to day. The wool trade is no stranger to big price swings and volatility but the magnitude of the recent price movements has been on a scale that even veterans of the trade have not seen. This is indicative of current strategies of minimal to zero risk appetite of stock of forward exposure by both seller and buyer. The sudden change in sentiment late in the opening session saw a good recovery in most sectors led by renewed Chinese enquiry seemingly, for the moment, shrugging off the worry and fear that wool could be caught up in trade embargos between our two countries that is involving a raft of exports and uncertain future for some commodities. AWTA figures for October were released with an 18% fall in weight of wool tested when compared to the same month in 2019. The progressive total for the season (July to October) is back by 11.4% (10.8mkg less), 84.8 to 95.6mkg. The amount of wool offered is slightly lower than last season - 8,620 bales (1.6%).

The news of the likely outcome of the US election and, more importantly, news of several vaccines having a 90% success rate in trials being conducted and release dates either side of Christmas sent stock markets and commodities climbing as infection rates in the US climb and Europe is trying to combat the 2nd wave with another round of restrictions and lockdowns. The mass release of a vaccine can’t come quick enough. 40,000 bales are on offer next week and, if futures trading is any guide, firm to 20 cents higher is the most likely outcome.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Jan/Feb 21

1180

Main Buyers (This Week)

1

Techwool Trading

4709

2

Endeavour Wool

3987

3

Tianyu Wool

3495

4

Lempriere

2239

5

United Wool

2535

6

PJ Morris Wool

2461

Eastern Market Indicators (AUD cents/kg clean)

1189 cents é 1 cent compared with 06/11/2020

Northern Market Indicators (AUD cents/kg clean)

1252 cents é 7 cents compared with 06/11/2020

   AUD/USD Currency Exchange

0.7307 é 0.0130 compared with 06/11/2020

6 November 2020

Friday, November 06, 2020

 WEEKLY MARKET REPORT

Week Ending 6th November, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S19/20

This Week

M19/20

Last Sale

S18/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1808

1810n 1741
+67 1978 -170

18

1578

1579

1516

+62

1875

-297

19

1393

1374

1313

+80

1776

-383

20

1259

1270

1191

+68

1725

-466
21 1208n 1208 1158n +50 1713n -505
 26 838n - 803n +35 1204n -366

28

615n

623

593n

+22

919n

-304

MC

764n

774n

778n

-14

1055n

-291

WILD VOLATILITY SET TO CONTINUE!!!

The market correction we spoke of in our last report was indeed swift but, on the flipside, the downward trajectory that usually follows the large upward jolt was just as quick. The volatility in the market has everyone bamboozled as now the day-to-day wild movements in the market are impossible to predict and harder to keep up with. The market roared away in the opening session only to give back half of the first day’s gains on the 2nd day. We have been fortunate enough to sell on the “dearer” days when the market has lifted significantly over the past few sales. All microns added triple figures to their values on Wednesday (100 to 135) only to give up 40 to 60 cents in the closing session. This saw the AWEX EMI ascend by 50 cents to 1188 for the sale with a 40 cent rise in US$ terms to 853. The slight fall in the FRX early in the week may have assisted the market but then the rise later in the week certainly helped the buyers pull the market back. THE A$ sits well above 72 cents on Friday morning - not a good sign for next week with the national catalogue at 42,000 bales.

All fleece microns finished the sale 50 to 80 cents higher but, looking at the quotes, some identical types had up to 100 cents difference in price from day to day. There was a similar pattern in the skirting sector but, for 17.5 and finer, these types managed to hang on to their 110 to 130 cents gains on the first day with broader lots rising and falling over the course of the sale to finish the week 30 to 40 cents to the good. Cardings also told a similar story to their merino combing counterparts - up on the opening day only to fall more than the initial gains in the final session as the 3 MCIs lost an average of 19 cents as all types in this sector were 10 to 20 cents cheaper. Crossbreds followed a similar pattern to the merinos with good rises on the opening day only to adjust downwards in the final session to finish the sale 20 to 30 cents higher. The passed-in rate fell from last week’s high of 26% to 9% this week (2.6% on Wednesday and 15% on Thursday when the market fell).

The current volatility we are experiencing has been nothing like we have seen before, certainly not to this extent. Over the past 10 selling days, stretching back to early October, the market has moved in total by 466 cents (an average of 46 cents/day). The current purchasing pattern of stepping in and buying like there’s no tomorrow then taking a “sit on the fence and wait approach” to let the market lose all the ground it gained the day or week before is frustrating to all in the industry here and complexing as to how the Chinese can make money when the market is fluctuating so widely within the space of days and weeks. Planning to offer wool on hold is now becoming a lottery as picking a market that might remain solid after a good rise is nigh on impossible as current volatility now rules out any ideas of where the market might be in a week or two.

Also on the horizon is the re-emergence of the pandemic in Europe. Britain went back into lockdown last night with only essential services operating. The inability of consumers to go out and spend money could cruel some EU economies that were getting back on their feet. This could put the wool market’s recovery in a tailspin if Europeans can’t spend in what is one of our most important markets as the big Christmas spending period is approaching fast and a northern hemisphere winter is very close, a peak period for consumers to buy woolen products. As we said earlier 42,000 bales are on offer next week and the cheaper pattern on the final day of this week’s sale looks set to continue next sale.

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Jan/Feb 21

1150

Main Buyers (This Week)

1

Techwool Trading

5104

2

Endeavour Wool

3093

3

Lempriere (Aust)

2869

4

United Wool

2239

5

PJ Morris Wool

1289

6

Tianyu Wool

992

Eastern Market Indicators (AUD cents/kg clean)

1188 cents é 50 cents compared with 30/10/2020

Northern Market Indicators (AUD cents/kg clean)

1245 cents é 55 cents compared with 30/10/2020

   AUD/USD Currency Exchange

0.7177 é 0.0033 compared with 30/10/2020

30 October 2020

Friday, October 30, 2020

 WEEKLY MARKET REPORT

Week Ending 30th October, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S18/20

This Week

M18/20

Last Sale

S17/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1741

1743 1846
-105 1992 -251

18

1516

1503

1622

-106

1928

-412

19

1313

1317

1419

-106

1848

-535

20

1191

1199

1292

-101

1800

-609
21 1158n 1147 1243n -85 1782 (M) -635 (M)
 26 803n 821n 883n -80 1233n -430

28

593n

598

663n

-70

959n

-366

MC

778n

799n

811n

-33

1086n

-308

MARKET CORRECTED BUT RECOVERY WILL BE SWIFT!

The wild volatility that the market has experienced kept going this series with the upward momentum that showed signs of stopping late last week hitting a brick wall this sale. Showfloor talk of a big correction under the weight of a large catalogue was spot on as the market gave back 80% of the previous series’ gains. A big drop on the opening day followed by a more tempered fall in the final session had the AWEX EMI lose 81 cents to 1138 and 50 cents in US$ terms to 813. The FRX did strengthen during the week by 2/3rds of a cent to 71.45. This certainly not helping but not the major contributor to the falling market. All microns were savaged - 16.5 and 21s the only ones not to fall by 100+ cents (90 and 85) with 17 to 20 micron dropping by 100 to 120. On the flip side, however, we did have some fleece lots realise prices above the quotes that had VM, TDR and high mid breaks suggesting the market had steadied late in the final session. Skirtings were also swept up in the big price adjustment as < 19.5 collapsed by 130 to 160 cents with the broader types reduced by 80/100 cents. Cardings escaped to a lesser extent compared to their merino combing counterparts with all types in this sector giving back 70 to 90 cents. Crossbreds also couldn’t sustain their recovery as finer than 28.5 micron fell by 60 to 100 cents while broader types were quoted down by 40/50 cents.

The market’s reaction to the big offering was highly predictable. The magnitude of the previous fortnight’s rises caught everyone by surprise and the fact that there was no “correction” before this week was probably more of a surprise to all in the industry. The anticipated large catalogue of 44,000 bales was, as history has shown, never going to make it to the auction rooms. 6,000 bales (13.6%) were withdrawn prior to sale and, with the high pass-in rate due to the falling market (9,700 bales, 26%), this left just 27,700 bales sold to the trade incredibly 5,000 less than the week before. How can the market fall with figures like this?? Perception can be a difficult thing to gauge with a normal human reaction to a commodity price rise being to try and take advantage of that short term increase in demand which sometimes, on the demand side, is hard to comprehend why suppliers would want to take advantage of the increased interest and have a situation of a “flooded market” which tends to result in a price reduction.

Ram sales have just about wound up in this area with the focus moving to the south of the state. A few more results: Bungulla at Manilla cleared 92% of their draft to average $1,705 with a top of $6,500; Blink Bonnie at Tarana had a top price of $3,500 to average $1,145 and cleared 87%; Hillcreston Park at Bigga achieved a top price of $7,000 with an average of $1,985  to clear 71%; Hazeldean at Cooma held their “Riverina” sale at Hay with a top price of $7,000 to average $2,600 and clear 90%; Cottage Park at Cooma cleared 92% to average $3,265 with a top price of $11,250.    

As the market tries to stage a recovery the elephant in the room is still Covid-19. The pandemic looks to be on a 2nd wave in Europe with fresh outbreaks as big in numbers as the initial stage. Some governments have reimposed lockdowns and restrictions which will slow economic growth and hinder consumer spending - not a good sign for the wool market looking for increased demand. There should be no problem in the short term however. Already the talk for next week is positive and widespread. The losses of this sale should be cut in half. Good luck in the Cup!!

        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Nov/Dec 20

1140

Main Buyers (This Week)

1

Techwool Trading

3622

2

Endeavour Wool

3064

3

Lempriere (Aust)

3017

4

PJ Morris Wool

2055

5

Aust. Merino

1865

6

Tianyu Wool

1093

Eastern Market Indicators (AUD cents/kg clean)

1138 cents ê 10 cents compared with 23/10/2020

Northern Market Indicators (AUD cents/kg clean)

1190 cents ê 11 cents compared with 23/10/2020

   AUD/USD Currency Exchange

0.714 é 0.0012 compared with 23/10/2020

23 September, 2020

Friday, October 23, 2020

 WEEKLY MARKET REPORT

Week Ending 23th October, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S17/20

This Week

M17/20

Last Sale

S16/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1846

1820n 1777
+69 1922 -76

18

1622

1615

1543

+79

1865

-243

19

1419

1390

1309

+110

1789

-370

20

1292

1283

1177

+115

1748

-456
21 1243n 1204 1140n +103 1743n -500
 26 883n 886n 753n +130 1160n -277

28

663n

673

520n

+143

899n

-236

MC

811n

816n

763n

+48

987n

-176

SIX MONTH HIGH!!

An explosive opening to this week’s sale as the 1st day’s rise of 123 cents (up to 1240) was 2nd only to the 130 cent daily climb in September, 2019 (S11) in the 20 years of market reporting by AWEX. Prices did soften in the final session in what was quite a week for wool sales. By week’s end the AWEX EMI had added 102 cents to finish at 1219 - its highest point since late April - this surge in the market now stretching back 7 weeks to see a gain of 360 cents (38%). In US$ terms the 1.2% fall in the FRX assisted in holding the EMI in check somewhat rising by 62 cents to 863. Rises for fleece wools ranged from 70 to 130 cents while the skirting selection had a very tight price rise with all types increasing by 100 to 110 cents. Cardings also kept up with their merino combing counterparts and didn’t really suffer any downward adjustment in the final session to add 30 to 80 cents across all types in this sector. Each centre MCI averaged a 45 cent rise to see the 3 MCIs well and truly aligned in price (811 to 816 cents). Crossbreds were also swept up in the price rising frenzy but unlike the merinos which fell on the final day - they added to their values to finish the sale up by 90 to 130 cents (15 to 30%).
After last week’s hefty rises (95 cents) and the 100 cent lift a month ago, all participants were wondering when the inevitable correction would come as it would be a case of when not if. There was a downward price adjustment after the big lift 4 weeks ago, but the recovery was swift - just 1 sale to recover the losses. After the big rise last week many thought this sale would be under pressure but show floor talk of 50 cents or more was commonplace - even with quantities growing by over 5,000 bales after last week’s sale had concluded. It’s always a given that when the wool market rises so rapidly there is a rush to offer wool. Next week is no exception, week to week forecasts have gone up by 6.5% (2,150 bales) from last Monday to this Monday - the latest figure being 44,000 bales up by 20% (8,700) from earlier in the week. Buyers have said for months now that with the reduced demand, the market can only absorb up to 35,000 bales/week - so next week’s quantity could be problematical for the increased volume at current price levels. Since the price recovery started in September the average weekly offering has been 26,800 bales - a big factor in why the market has jumped to its current level from the low point of 858 cents in early September. The volatility over the past 12 to 18 months has been dramatic, the EMI has moved more than 30c/kg on 40% of the auction days so far this season. For a smooth upward trajectory to continue we need a steady increase of demand - not all in and then sitting on the fence as has been the pattern for a long time. Demand for sweaters and uniforms out of China is good hence the latest price rises. Talk that Indian processors look to be recommencing work while Europe is still battling the 2nd wave of the Pandemic leaves us with key markets outside of China struggling to sell woolen garments and fabrics but there is light at the end of the tunnel.

A few ram sale results: Grogansworth at Bowning cleared 97% for a top price of $7,500 averaging at $2,625; Merrignee at Boorowa averaged $2,260 clearing 93% for a top of $4,500; Grassy Creek at Reids Flat sold all 152 rams to average $2,970 with a top of $9,000. Egelabra at Warren also achieved a top of $9,000 averaging $2,975 for all 158 rams offered and Glenwood at Wellington sold all but 2 of their 140 rams penned to average $3,100 with a top of $12,000.

The softer market late this week looks to continue next week under the weight of the largest catalogue since early August.


        Southern Aurora Fwd Prices            

Micron

Date

Low

21

Nov/Dec 20

1180

Main Buyers (This Week)

1

Techwool Trading

4,703

2

Endeavour Wool

3,736

3

Lempriere (Aust)

2,248

4

United Wool Co

2,078

5

Fox & Lillie

2,006

6

Australian Merino

1,877

Eastern Market Indicators (AUD cents/kg clean)

1219 cents ê 21 cents compared with 20/10/2020

Northern Market Indicators (AUD cents/kg clean)

1278 cents ê 19 cents compared with 20/10/2020

   AUD/USD Currency Exchange

0.708 é 0.0038 compared with 20/10/2020

16 October, 2020

Friday, October 16, 2020

 WEEKLY MARKET REPORT

Week Ending 16th October, 2020

 AWEX Northern Micron Indices Comparison

AWEX INDEX

This Week

S16/20

This Week

M16/20

Last Sale

S15/20

Sydney

Change

Last Year

Sydney

Sydney Yearly

Change

17

1777

1732n 1626
+151 1898 -121

18

1543

1532

1402

+141

1850

-307

19

1309

1304

1195

+114

1763

-454

20

1177

1160

1069

+108

1722

-545
21 1140n 1145 1030n +110 1712n -572
 26 753n 748 693n +60 1160n -407

28

520n

515

484n

+36

899n

-379

MC

763n

754n

732n

+31

987n

-224

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 1st 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.


                                                   Southern Aurora Fwd Prices            

Micron

Date

Low

21

Nov/Dec 20

1110

Main Buyers (This Week)

1

Endeavour Wool

4,263

2

Australian Merino

3,103

3

Techwool Trading

2,578

4

Fox & Lillie

2,350

5

PJ Morris Wool

1,611

6

Tianyu Wool

1,169

Eastern Market Indicators (AUD cents/kg clean)

1117 cents é 51 cents compared with 13/10/2020

Northern Market Indicators (AUD cents/kg clean)

1184 cents é 56 cents compared with 13/10/2020

   AUD/USD Currency Exchange

0.717 é 0.0004 compared with 13/10/2020