WEEKLY MARKET REPORT 

Week Ending 1st February, 2019

 AWEX Northern Micron Indices Comparison

HAPPY CHINESE NEW YEAR … HOPEFULLY!

The wool market plodded along this week with mixed results in all 3 centres as national weekly offerings are now averaging 40,000 bales following on from the 2 big opening sales of the new year. The AWEX EMI pushed ahead by 7 cents to 1934 with most microns moving by single figures either way in Sydney. In US$ terms the EMI added 33 cents to 1405, this due the rising A$ as the sale progressed, up by 1.5 cents (2.2%) for the week. With the volume of drought affected wool increasing each sale only the long, low VM higher yielding types are immune from any major price discount. Buyers are finding it harder to place the burrier, tender, short and sub 60% yielding fleece types and are adjusting prices accordingly as only the best types attract solid premiums.

Skirtings also improved by modest margins - 10 to 20 cents for most types bar the very high VM lots. Again LKS weighed heavily on the carding sector as < 17 micron types were reduced by 30/50 cents with STN giving up 20 to 30 cents. The best performing of all sectors were the XBs. After an excellent opening 2 sales they were in hot demand again as finer than 26 micron added up to 50 cents while 28/30s climbed by 100 cents as some exporters are blending these with fine wools - the reason for the renewed interest as 28 micron is at a 5 year peak.

The 2 fundamentals that remain in place (supply and demand) will dictate above all which way the market goes but we do face some headwinds. The market looks to be coping with the FRX fluctuations as this sale demonstrated although new forward business is hard to come by at current market levels given the quality of wool on offer as processors try to balance the need to keep machinery running and the inability to pass the current price levels to downstream customers. Some overseas manufacturers are looking to other sources to continue processing but the move to blending XBs with merino rather than a shift to blend synthetics is working thus far. The ongoing US/China trade war, the messy Brexit in Europe and the slowing Chinese economy could all play their part at some stage on wool prices. AWTA reports that 12% less wool was tested in January 2019 compared to the same month last year and wool sold year to year is 19% (201,000) lower than last season to date. As we approach Chinese New Year, most pundits forecast good types to hold while off style wools could struggle.

Ag Concepts Fwd Prices as at 1 February 2019

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 25th January, 2019

 AWEX Northern Micron Indices Comparison

LESS WOOL, LITTLE RAIN, MORE DUST

Last week’s predictions of a stronger market were spot on in most categories, particularly in the Northern market as all merino fleece micron indicators posted reasonable gains. The crossbred sector along with cardings showed some resistance - not really that surprising as 26 micron surged 134 cents in the preceding two weeks. Some analysts are saying that the Chinese are struggling to keep machinery running, some at 50% operation and are buying crossbred wool because it is cheaper hoping to sell it in blended form to keep the doors open. Seasonally, China has fallen from 76% to 71% of the offering; India has edged up to 7% with Italy 6% and Czech Republic (Modiano) with 4%.

I know we talk about lower offerings most weeks but the further we go this season the more this plays out and there is constant speculation about how the market will react as it continues to decline. One reaction we are seeing as the year unfolds is the competition on well-measured wool (particularly lower VM types) and who is buying them. In the last few weeks we have seen some well grown western division clips with good length (80-90mm) and high NKT receiving very strong competition and from buyers like New England Wool (Barberis and Reda) who normally focus on more traditional fine wool types. Many of the typical fine wools are a lot finer than normal and many under 35 NKT with high mid-breaks. Removing burry hind legs and keeping the fleece portion as low as possible is a real winner this season, if you can get it under 2%.

The other feature worth noting this season is the increasing premiums for non-mulesed wool. It’s been a long time coming but non-mulesed lines which also carry other favourable specs have been attracting greater competition from a wider audience of buyers. The other factor with these wools is that more and more of them are contracted forward so they don’t figure in the most recent price analysis.

Next week nationally 40,629 bales will be offered with just 8,929 to be offered in Sydney. Macwool will offer 746 bales on Thursday. Have a good hot Australia Day weekend!

Ag Concepts Fwd Prices as at 25 January 2019

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 18th January, 2019

 AWEX Northern Micron Indices Comparison

BUYERS ABSORB BIG VOLUME!

Despite the largest national offering of the season to date (51,700 bales) the market absorbed the excess volume easier than most pundits thought. As far as the merino fleece sector was concerned, it was a sale of contrasts as finer types        <18.5 fell by 10 to 35 cents due mainly to the sub-standard quality of the offering feeling the effects of the drought, bar the lots with the “right specs” that were 25 to 120 cents dearer than their indicators. The 19s and coarser improved by 10 to 25 cents. The AWEX EMI gained 13 cents to 1923 helped along by the rises in fine XBs and merino cardings and skirtings.

Skirtings had a solid sale as all types and descriptions were 10 to 20 cents to the good. Cardings kept their momentum going from last sale as all types added 15 to 30 cents to their previous values to put the MCI in Sydney at 1202 cents. Crossbreds also had another stellar sale to follow on from last series as 28s and finer climbed by 50/80 cents.

Speculation of supply concerns is all the talk on the showfloor, too much in these opening 2 sales and a sharp decline for the next 4 weeks. As we stand at the present time there has been 175,000 bales less offered than the same time last season, a 17% decline or about 4 sales!! A telling factor of the 2 sales since the new year was the re-emerging of one of the bigger local trading companies taking on the Chinese indent buyers to see price levels in the medium types benefit from an increase in competition as price determination in the finer sector is now truly driven by poor quality and a rise in volume due to the drought.

The fine XB sector (25 to 28 micron) has had the largest increases of any type recently, 100 cents. The main reason is Australia is still the primary source of “good white” wools in this category and mills can keep combing machinery running at similar settings to full length merino fleece types. At the other end of the market carding wools look to be back in favour as well. European retailers are reporting improving winter sales after a slow start to the season. Hopefully the recent blast of cold weather can keep sales ticking along. Next week has quantities falling back to 41,000 bales with all the talk being a solid to dearer market.

Ag Concepts Fwd Prices as at 18 January 2019

Main Buyers (This Week)

WEEKLY MARKET REPORT 

Week Ending 11th January, 2019

 AWEX Northern Micron Indices Comparison

OFF TO A FLYING START!

Buyers hit the market with a vengeance to kick off the 2^nd half of the selling season after the 3 week Christmas recess. With the A$ commencing the new year at 70 cents (a fall of 2.30 cents from Sale 24) and dipping below that point for a night last week, most Chinese mills were keen to book up wool at the more favourable FRX. Despite the large forecast offering of 50,000+ bales (47,600 was the final figure offered) the market was dearer from the outset only to drift fractionally in the final session in Sydney and Fremantle when the FRX edged higher to its pre-Christmas level. Medium and broad types (19 to 23s) performed the best climbing 50 to 65 cents while finer microns added 15 to 35 cents as the AWEX EMI rose by 48 cents to 1910 and by 25 cents to 1371 in US$. The market in Euros and Chinese Yuan only rose less than 1% illustrating not all mills had to extend themselves from the pre-Christmas levels to buy wool.

Skirtings also kept pace with their fleece counterparts as all types and descriptions across all microns looked 30 to 40 dearer. Cardings recouped their losses from S24 as the 3 regional indicators averaged 35 cent increases as LKS/STN lifted by 35 to 40 cents. Crossbreds were back in favour to recover some of their heavy losses from early December as most microns added 30 to 70 cents despite the large quantity on offer this week - 27% of the national offering and a whopping 37% of the Melbourne catalogues were crossbred types.

A great start to the year is not uncommon as for several past Januaries the market has staged a very good rally in any of the 3 opening sales of the year. Can this week’s rise be sustained or even increase?? Opinion is divided. On one hand demand is good and the need to keep machinery running after 3 weeks of not buying wool is critical. On the flip-side, next week’s national catalogue of 54,000 bales could be the largest of the season so far and the FRX has recovered to 71.85, a figure that might look a bit too high to do business with so much wool to pick from. Year on year comparisons has just 735,000 bales sold against 935,000 last season - a massive drop of 21% in 6 months. AWTA figures show 161.3mkg tested this season to date down from 183.3mkg last season. We sell early next Thursday and, hopefully, the market can hold till then.

  Ag Concepts Fwd Prices as at 11 January, 2019

Main Buyers (This Week)

 WEEKLY MARKET REPORT 

Week Ending 14th December, 2018

 AWEX Northern Micron Indices Comparison

WISHING ALL A VERY MERRY WET, WET CHRISTMAS!!

A spectacular year for the market as the highs of June (2073) and August (2089) were offset by the low point of 1776 in early November. This was the cheapest point for cardings (1020) while their peak was 1563 cents in mid September. We wish all our clients a Merry Christmas and Happy New Year with drought breaking rains the best Christmas present we could all wish for. Wool sales resume on 9th January, 2019.

Main Buyers (This Week)

1 Techwool 6507 2 Tianyu 4005 3 Fox & Lillie 3791 4 Aust. Merino 3505 5 Kathaytex 2457 6 Seatech Ind. 2423

Eastern Market Indicators (AUD cents/kg clean) 1862 cents é 13 cents compared with 7/12/2018 Northern Market Indicators (AUD cents/kg clean) 1906 cents é 9 cents compared with 7/12/2018 AUD/USD Currency Exchange 0.7228 é 0.0003 compared with 7/12/2018

WEEKLY MARKET REPORT

Week Ending 7th December, 2018

 AWEX Northern Micron Indices Comparison

AWEX INDEX	This Week S23/18	This Week M23/18	Last Sale S22/18	Sydney Change	Last Year Sydney	Sydney Yearly Change
17	2513	2445	2487	+26	2477	+36
18	2379	2326	2372	+7	2273	+106
19	2218	2202	2188	+30	2015	+203
20	2147	2156	2141	+6	1794	+353
21	2129	2133	2129	0	1669	+460
22	-	2140n	-	-1 (M)	1564 (M)	+576 (M)
26	1205	1244n	1335n	-130	1064	+141
28	855	850	-	-	772	+83
30	703n	683	-	-	571	+132
MC	1183	1174n	1199	-16	1433	-250

PENULTIMATE SALE DELIVERS ... NOT MUCH!

When looking at the AWEX EMI it’s hard to imagine little change with the 11 cent fall to 1849 cents but there were many twists and turns in the different sectors as XBs contributed to the slight fall. By week’s end the merino fleece sector had made some reasonable gains, up to 30 cents with some finer, lower style types over 2% VM commonly 50/60 cents to the good.

After a slow start merino skirtings came home with a wet sail again with gains similar to the fleece sector, up to 30 cents. Cardings took a breather from their rapid rises of a few weeks ago losing what they gained last series as all types retreated by 30 cents. After a few sales of whirlwind rises buyers put the brakes on any further gains in the XB sector citing the last series’ jumps too much as most microns lost 70 to 130 cents. The “fake fur” order that led to the sudden rises is still in place and will come into play again in January. Another reason for the fall could’ve been the sudden lift in volume of XBs particularly in Melbourne where only 17% of the Room 2 wools were merino PCS and BLS.

A good sale for merino growers as these types look to be building momentum again. The main Chinese indent buyer was again quiet but local traders filled this void to out-bid him on most occasions operating on a strict buy-in level price, not their usual method of purchasing.  Australia’s biggest buyer, Techwool Trading, flexed their muscle to buy 16% of the total sold this sale buying twice the volume of the next buyer on Thursday.

The sharp decline in the FRX from almost 74 cents on Monday to below 72 cents on Thursday - a 2 cent fall - was too late to help the markets on the Eastern seaboard but did benefit the Fremantle market, up by 20 to 45 cents on Thursday. The release of Australia’s poor GDP figures and trade issues between China and the USA saw financial markets tumble and currencies react. Next week sees the final sale of the year with 48,000 bales on offer - the largest sale since early August. Hopefully buyers will need to buy and ship wool to keep machinery running in January.

Ag Concepts Fwd Prices at 7 December 2018

Main Buyers (This Week)

WEEKLY MARKET REPORT

Week Ending 30th November, 2018

 AWEX Northern Micron Indices Comparison

MARKET MARKS TIME

Main Buyers (This Week)

WEEKLY MARKET REPORT

Week Ending 23rd November, 2018

 AWEX Northern Micron Indices Comparison

AT LONG LAST, THE MARKET LIFTS

Finally, after weeks of showfloor chatter of a recovery in the market, it did happen!! Hopes were high after the last series’ modest rises that the market could get some serious traction and recoup the recent losses. Whether it be the lower quantities on offer, the fall in the FRX from the Tuesday night high of 73.35 cents to 72.3 before sales commenced, the latest release of wool production forecasting figures or just that the market had fallen enough and the Chinese deemed it was time to step back in and start to buy again is anyone’s guess.

Whatever the reason it was a dearer market in all sectors. The AWEX EMI clawed back 77 cents to 1858 led by the medium wool types (19 to 22s) up by 100 to 120 cents. Finer microns were dearer but not to the extent of their broader cousins, still hindered by oversupply and poor quality, 18/18.5 jumped by 60 to 70 cents while < 18 could only find 15 to 30 cent gains as discounts for any fault shrunk as 97.6% of fleece lots were sold in Sydney.

The positive tone also extended to Room 2 as skirtings, regardless of VM, style or micron added 40 to 80 cents to their values. It was another good sale for cardings as they jumped an identical amount to last series, 80 cents to 1180 as all types posted 50 to 80 cent rises. Crossbreds weren’t to be outdone either as < 28s climbed by 85 to 110 cents while broader than 30 microns looked up to 50 cents to the good.

As mentioned above whatever it takes for the market to rise is welcome but a major factor could have been the latest release of figures by the Wool Production Forecasting Committee that met last week, a month ahead of schedule due to global concern of supply in Australia. The new forecast came in at 305mkg for the current season, down from the 322mkg that was predicted at their August meeting and back by 11% on the 341mkg from last season. These figures are backed up by the AWTA stats that are 9.7% behind last year’s totals to the end of October and offerings are 17% (136,800 bales) lower than to the same sale last year. NSW production is predicted to fall by 20% this season to 100mkg, the lowest since 1902 with some brokers talking of a 25% reduction of wool through their stores by July next year. Alarming stats indeed! Talk of the market keeping this momentum is all the rage with only 3 sales before Christmas buyers need to deliver wool to their mills promptly to process in the new year with the 3 week recess looming.

Ag Concepts Fwd Prices at 23 November 2018

Main Buyers (This Week)

WEEKLY MARKET REPORT

Week Ending 16th November, 2018

 AWEX Northern Micron Indices Comparison

WOOLGROWERS VOTE FOR 1.5%

The recent Woolpoll voting results have finally been released after the closest vote on record. Like most political elections, preferences had to come into play to determine a winner as first-hand results were too close to call between the 2 favoured options, 1.5% and 2%. After the final tally of preferences the 1.5% levy won by 52.5% over 47.5% for the current rate of 2% to be retained. Despite the call for the levy to be held at 2% from AWI, various industry groups lobbied for the lower option despite the forecasted less revenue due to less wool being sold and with less finances coming in putting some projects at risk. The new levy will commence from July 2019.      

For just the 4^th time in 13 weeks - since the big rise in mid August - the AWEX EMI took a turn for the better, with a modest 5 cent gain to 1781. Talk of a recovery or the market bottoming out has been in the wings for 2-3 sales now but only came to fruition this sale due mainly to a buoyant XB and carding market. The large volume of dusty, fine and tender types < 19 micron saw these wools lose 35 to 55 cents whereas the odd lot with “good specs” gained 40 to 60 cents. Broader microns managed to hold their ground to finish in sellers’ favour. A much higher acceptance of these current prices by growers saw just 6% of the Sydney fleece catalogue passed-in.

The big movers in the market were in Room 2. Skirtings had an up and down sale as the opening day’s losses of 20 to 30 cents were regained in the closing session to see this sector finish unchanged to sellers’ favour. The big mover was the carding sector. After getting hammered since the record peak of 1563 cents in mid September to last sale’s low of 1020 (a 543 cent collapse – 35%) the 3 centres averaged a 90 cent gain as all types in this sector added 50 to 150 cents to their previous values. Crossbreds were also buoyed by the renewed buyer competition increasing by up to 30 cents.

Could this finally be the bottom of this price cycle? It may well be if all other sectors follow the lead of cardings as a Chinese delegation was here this week and were keen to purchase carding types having been out of the market for several weeks. Also of note was the lift in prices of inferior fleece types by 40 cents late in the final session. The market in Euro terms gained 1.1% even with the ascendency in this currency by 3.5% over the past 3 weeks indicating increased support for the better European types despite China’s absence from the market. Many “good judges” are predicting a dearer market through to Christmas - hope their on the money!!

Ag Concepts Fwd Prices at 16 November 2018

Main Buyers (This Week)

WEEKLY MARKET REPORT

Week Ending 9th November, 2018

 AWEX Northern Micron Indices Comparison

THE END OF AN ERA AT AWI

AWI Chairman, Wal Merriman announced today that he had stood down as Chairman of the company after 13 years in the top job. His decision came just prior to the AGM in two weeks time to allow the incoming Chair, Colette Garnsey, time to prepare for the next busy year. Wal’s contribution has been enormous and one hopes his tenure is remembered as one who steered and guided the company back into marketing and putting wool back on the stage in the world fashion industry. He leaves his position with the company in a strong financial position with a list of many significant achievements for the wool grower shareholders.

It seems nothing at the moment can influence the buyers into a positive change of sentiment as the market lurched further into negative territory. Each region recorded similar losses (74 to 82 cents) as the AWEX EMI retreated to the tune of 78 cents to 1776. In US$ terms the fall was not as severe, a 29 cent fall to 1293 this due the FRX ascending against the A$ by 1.5 cents. Even though falls were across the board, fortunes were reversed from the previous few sales as the < 18.5 micron escaped the bigger losses of their broader counterparts (45 to 70 cents) as 19 and coarser collapsed by 95 to 130 cents - a sign that the gap between the fine and broad microns was too close as in the past few sales the <19 micron have been falling dramatically and broader types not so. Only the very best style lots with good length and strength results escaped the carnage giving up 20/40 cents.

Skirtings also came under the pump as losses across all microns, VM, styles and lengths totaled another 50 to 100 cents. Cardings again copped a caning as some buyers were still sitting on the side-lines as all types in this sector were quoted 60 to 100 cents behind the previous series. Crossbreds took reasonable hits as well with a cut-off point around 26 micron. Finer than this the falls ranged from 50 to 100 cents while coarser types were adjusted down by 20/30 cents.

After last series relatively minor falls talk of the falling market reversing its fortunes was widespread. That was until the FRX shifted in favour of the 3 major wool trading destinations as the A$ jumped and buyers let the market freefall again. Talk is still strong that the market is very close to the bottom.

Ag Concepts Fwd Prices at 9 November 2018

Main Buyers (This Week)