Month: March 2018

Wool market stronger ….. or is it?

Posted on by Caitlin Dearden

Across the board the Australian wool market Micron Price Guides (MPG’s) were all quoted higher, the only exception on the AWEX Wool Market Report was the Cardings indicators.

The MPG Indicators however failed to provide the whole picture; underneath the headline report is a more complex story.

The most significant factor in this week’s market was the Au$; by the end of the week it was quoted down US$0.013, sitting below US$0.78 for the first time in 2018. As a consequence, the Eastern Market Indicator (EMI) rallied by $0.08 for the week to close at 1820¢. This picked up all the fall of last week. As well, the Western Market Indicator (WMI) improved 16 cents to finish at 1895 cents.

To complete the currency story and its influence on this week’s market, the EMI in US$ terms fell 17 cents, this meant a cheaper week on week for buyers, and better prices for wool sellers thanks to an easing Au$.

There is another underlying story, at this time of the year there is more “faulty” wool on offer. Lots with higher VM have been steadily increasing, which results in these types receiving erratic competition. There is another side to this story, and that is that FNF types (wool with less than 1% VM), are increasingly difficult for buyers to source and at times extreme prices are bid for particular lots.

The issue of quality has also permeated into the X Bred section of the market. In the past couple of years, it has been the trend to spend less time preparing X Bred wool in the wool shed, with some producers electing to either not skirt or minimal skirt in their wool preparation. When the market is buoyant or under tight supply this preparation model has little impact on prices, however, when the demand softens or supply increases (both currently the situation with X Bred wool), buyers can overlook less prepared types. This is the case now. Buyers can fil orders with “traditionally” prepared wool; poorly prepared lots are then used as bargain buys to cheapen orders.

Of the 41,815 bales originally offered, 39,429 sold with a Pass-in rate of 5.4% or just 2,240 bales.

The week ahead

Sales are scheduled for all three centres next week on Wednesday & Thursday.

A total of 44,506 bales are rostered for next week, slightly more than this week’s offering; the roster drops away over the following 2 weeks with 41,500 and 39,100 anticipated.

High northern throughput has little impact.

Posted on by Caitlin Dearden

A surge in cattle yardings in Queensland and NSW this week failed to make a huge impact upon prices with markets ending the week fairly mixed. The Eastern Young Cattle Indicator (EYCI) only marginally softer, down a mere 3.25¢ to close at 521.25¢/kg cwt.

Table 1 highlights the mixed fortunes for the week, with lighter East coast steer categories mirroring the EYCI, posting marginal falls. East coast Trade Steers were the weakest, off 3% to close at 273.2¢/kg lwt. In contrast, East coast steers remained reasonably flat at 260.7¢, while Medium cows managed to lift 1.4% to 196.1¢/kg lwt.

In the West, young cattle were given a bit of a shake up, dropping 3% to 574¢/kg cwt, although still sitting relatively comfortable running 10% higher than Eastern states young cattle. In offshore markets, the 90CL frozen cow was steady above 600¢/kg – Figure 1.

Figure 2 demonstrates the surge in East coast cattle throughput on the week with a 42% gain recorded to just of 78,000 head. This pushes weekly yarding levels to well outside the normal variation than can be expected for this time in the season, and places it 28% higher than the five-year seasonal average.

The surge in East coast yarding levels this week was supported by increased throughput in Queensland and NSW. Indeed, Queensland cattle yardings of over 32,500 head represent a doubling of the numbers seen at the saleyards last week and NSW posted a 26% lift in numbers to over 31,600 head.

What does it mean/next week?:

Compared to the five-year seasonal average throughput pattern, the Queensland yarding figures posted this week are 73% higher, while the NSW throughput is elevated by 30%. It’s likely that this elevated yarding is a reaction to the muted wet season, although there was some reasonable rainfall recorded along the Eastern regions of both NSW and Queensland this week.

Given the increased numbers at the sale yard, it’s a reasonably good sign that prices didn’t soften too much across the East coast, a signal that demand is robust enough to soak up the added volume. More rain is forecast for much of the north east of the nation this week and this could see throughput levels return to more normal conditions, particularly in Queensland and NSW. If demand can be sustained, the reduced throughput could see cattle prices gain towards the end of February.