Category: Sheep

Wool supply issues in the north

Posted on by Caitlin Dearden

The drought is showing its effect especially in the northern selling centre (Sydney), where a very small offering of 7,500 bales last week met with strong competition.

The south and western selling centres provided the bulk of the offering with 23,000 & 9,500 respectively, while the solid demand was widespread across all centres.

The Eastern Market Indicator (EMI) gained 24 cents to accumulate a 57 cent rise this calendar year, ending the week at 1,968 cents. The Au$ was again slightly stronger up 0.4%; the EMI in US$ terms was also dearer up 21 cents to end the week at 1,401 US cents (Table 1).

In Fremantle, the Western Market Indicator (WMI) continued to strengthen, rising 29 cents on the back of a solid performance since December last year to end the week at 2130 cents.

40,000 bales were offered for sale this week, with the trade clearing 38,030. Again, growers were impressed with the market and passed in only 5.3% or 2,135 bales.

It must be a strong market as Fremantle had a low pass-in rate, in fact on the final day 97% of fleece wool in the west was cleared to the trade providing the lowest pass-in rate since September.

The dollar value for the week was $83.28 million, for a combined value of $2.06 billion so far this season.

In the auction weeks since the winter recess, 864,304 bales have been cleared to the trade, 212,117 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year now sits at 8,484 bales per week fewer.

All types benefited from the strong market, 28 MPG up 50 Cents for the week in Melbourne, while Skirtings and with the Cardings indicators all had a good week to end dearer across the board.

The week ahead

It is with some degree of confidence that we can look forward to the next few weeks at least. According to the AWEX roster, the next week 42,400 per week are predicted, with 35,000 and 36,000 bales the next two week.

Buyers are filling orders as best they can with limited offerings, especially noted is the lack of low VM, high N/KTex wool styles which continue to be highly sought.

When 620¢ is no longer enough.

Posted on by Caitlin Dearden

Late last week the lamb and sheep market found some strength.  Prices will only fall for so long before grower baulk and put other strategies in place.  Either supply has run out, or producers are holding off.  Either way it looks like we might have seen the bottom.

It took until later in the week, but the Eastern States Trade Lamb Indicator (ESTLI) and the National Mutton Indicator both jumped higher yesterday.  Based on the individual saleyard reports we know that supply was back, and even with a lot of lambs going direct to works, buyers had to battle it out.

The ESTLI finished the week up 22¢ at 643¢/kg cwt (figure 1).  This is after hitting a low of 621¢ on Tuesday.  The major market mover was Wagga, with higher prices on big yarding, while in Victoria yardings were well back, and prices higher.

The National Mutton Indicator was also higher, but figure 2 shows it hasn’t broken its downward trend.  It will have to go back past 420¢ before we can say that.

If you’re wondering why mutton has gotten cheap, figure 3 gives a pretty good idea.  Last week east coast sheep slaughter was at level which has only been beaten three times in the last 3 years.  That was last August.

WA and SA had the most expensive trade lambs this week.  Both sitting at 667¢/kg cwt, they are well ahead of last year, but likely have upside potential.

What does it mean/next week?:

It will be interesting to see if the price rise last week is enough to see lambs come back to the market. We wouldn’t really think so, but on the other hand processors do have a lot of lambs booked up, so prices aren’t going to go crazy.  For now.

Weekly Wool Forwards for week ending 15 February 2019

Posted on by Caitlin Dearden

An interesting trend has emerged this week in the auction market, where we’ve seen continual heightened prices across all micron categories. When coupled with the Aussie dollar on a continued downwards trend, one could expect that the forwards market could see more and more action in the coming weeks.

In the 18 micron category, one trade was dealt for June with the agreed price of 2350¢/kg.

In the 19 micron category, six trades were dealt. One was agreed for next month for 2285¢/kg. Two trades were dealt for May between 2240¢/kg and 2250¢/kg. Two trades were made for later in the year, November and December both agreeing at 2125¢/kg. The remaining trade was made for February next year for 2085¢/kg.

In the 21 micron category, two trades were dealt for April, one for 2200¢/kg and the other for 2220¢/kg.

While the Aussie dollar did rally slightly at the end of the week, the downward trend is still evident.  Throughout the time that this remains the case, activity from overseas buyers should be higher. The forward market has been very active for several weeks now, generally ignoring the fluctuating Aussie dollar value. This could hint that supply might still be a concern looking into the near future, but also could reflect an overseas comfort with the broader picture of Aussie dollar levels and trends.

For this weeks’ article investigating wool supply issues in the north see here

Supply forecast provokes aggressive buying.

Posted on by Caitlin Dearden

Despite a slight lift in volume of wool hitting the market this week prices managed to increase across most categories and centres. Looking ahead however, the roster indicates that the quantity of wool on offer is set to decline week after week.

AWEX reports claim that the forecast has led many exporters to attempt to secure volume while it’s available and sparked more aggressive buying behaviour this week.

The Eastern Market Indicator (EMI) ended the first day of sales flat, but increased 10 cents on the second day of selling, finishing the week at 1,944 cents. Last week’s Au$ rally came tumbling down this week, to 0.709 US cents. This saw the EMI take a harsh turn in US$ terms to close 25 cents lower at 1,380 cents (Table 1).

The market in the West showed much the same sense as in the East. The Western Market Indicator (WMI) gained 7 cents on the week to 2,101 cents.

The week saw a total offering of 39,894 bales come to market, with 7% passed in. This resulted in a clearance to the trade of 37,092 bales. The season to date has seen 992,742 bales offered which is short 176,735 bales compared to this point in the 17/18 season.

The dollar value for the week was $77.25 million, for a combined value of $1.97 billion so far this season.

Nearly all individual MPG’s saw gains in each selling centre this week. The only category to have taken a hit was fine wools in the South, which saw losses in the range of 5 to 25 cents. Fine wools in the North were a different story. Holding its first designated Superfine sale for 2019, the Northern region saw 16.5 to 18 micron wools lift 40 to 45 cents higher on the week, having received strong support for the event.

The Crossbred market continued its strong performance. 28 to 30 MPG’s were the most keenly sought after, with gains of 20 to 40 cents. Merino skirtings held firm across the centres, with limited offerings. The cardings indicators dropped back slightly in the East this week, while remained unchanged in the West.

The week ahead

Next week 39,520 bales are rostered for sale across the three centres on Wednesday and Thursday. This is only slightly reduced on this week’s volumes; however, a trend of declining supply is forecast. 38,205 and 35,275 bales are rostered for weeks 34 and 35 of the selling season respectively.

Price action suggests a rebound in supply

Posted on by Caitlin Dearden

The dip in lamb and sheep supply after last weeks shortened selling program was evident in throughput levels reported to Friday 1st of February. Lamb and sheep prices have continued to ease this week, suggesting that saleyard volumes have rebounded.

The Eastern States Trade Lamb Indicator (ESLTI) softened 4.6% this week to close at 633¢/kg cwt. East coast mutton was under pressure too, easing 7.6% to 368¢. Mutton prices across the Eastern seaboard have succumbed to elevated sheep slaughter volumes, with particularly high cull levels noted out of Victoria over the last month (Figure 1).

Victorian mutton slaughter has been running at weekly levels 24% higher than the five-year average since the start of 2019 and the increased volumes have continued to weigh on Victorian mutton prices with a 10¢ drop reported across Victorian saleyards according to the mid-week MLA market report. Victorian mutton is not the cheapest in the country though, at 378¢ it is still faring better than SA. SA mutton has dragged the chain, dropping 44¢ to 322¢ to make it the cheapest mutton in the nation.

East coast sheep yarding levels (as at Friday 1st February) are reflecting the shorter selling week with a 29% drop noted from the prior week’s figures to see just shy of 59,000 head change hands. The 2019 pattern is closely mirroring the five-year seasonal average trend and if this is any indication of what to expect for sheep yarding figures when MLA report them next Wednesday, we could see sheep yardings rebound toward the 85,000 head level (Figure 2).

A similar yarding pattern is emerging for East coast lamb with the 2019 trend also mirroring the five-year average (Figure 3). Lamb throughput (as at 1st February) declined 13% from the previous week to see it a whisker away from the seasonal average at around 138,000 head. Assuming lamb follows the seasonal average, we can expect to see a jump toward 190,000 reported for this week. Indeed, the price action suggests that supply has rebounded.

What does it mean/next week?:

Monsoonal conditions in northern Queensland have spun off a bit of moisture into the bottom South East quarter of the nation this week and a little more is forecast to fall into the coming week. While it isn’t enough to get lamb and sheep prices booming it’s likely to put a floor under further easing in the coming weeks.

Merino lambs finding support but restockers not

Posted on by Caitlin Dearden

The Australia Day holiday saw an interrupted week for lamb sales but prices were relatively steady for finished crossbred lambs. Though, we did see some interesting price movements for restocker and Merino lambs, as well as the Mutton indicator, which might be a preview of things to come.

Some large yards sell lambs on Monday’s so this week’s indicators could change a little come next week. It was, however, good to see the Eastern States Trade Lamb Indicator (ESTLI) move past Australia Day without falling further.

Regular readers will remember that lamb prices are usually strong in early January as lamb demand ramps up. This year processors were well prepared and booked stock early, only to see supply match demand and lower prices than expected. In the past we have seen prices fall in February as demand weakened, this year a supply drop might match it.

The steady finished lamb prices seem to be dragging restocker price expectations back. Figure 2 shows that restocker lamb prices are at their lowest level since August, as those finishing lambs adjust their buy price to reflect the finished lamb prices on offer.

Merino Lamb prices have done the opposite. Figure 3 has Merino lambs hitting a three month high.  Supplies of Merino lambs are likely to be getting thin, and maybe demand is picking up as those looking for restocking opportunities like the look of the wool value.

Mutton markets have also recovered with the National Mutton Indicator nearly back at 400¢. Still at a heavy discount to lamb, mutton has plenty of upside with some improved seasonal conditions.

Next week?

We would think the supply side of the lamb market should start seeing prices creep higher. We are already seeing a dearth of heavy lambs and we know from history that fewer heavy lambs soon translates into fewer trade lambs. Especially when feed is expensive.

Minor movements for wool.

Posted on by Caitlin Dearden

The general overview of this week’s wool market was that sellers saw minimal movements. In fact, if markets were stronger on day one they gave the gains back the next day, and vice versa if markets started softer.

Buyers began keenly but again there is evidence of wariness at these price levels, while wool growers are happy to continue to sell with a modest pass-in rate this week.

The Eastern Market Indicator (EMI) increased 7 cents on the week, ending at 1,934 cents. The Au$ compared to the last week was stronger at 0.712 US cents. That lifted the EMI in US$ terms to 1,405 cents, a strong rise of 32 cents (Table 1).

Fremantle had a smooth week of sales, with some small gains in finer MPG’s. The Western Market Indicator (WMI) rose 2 cents on the week to finish at 2,094 cents.

This week saw a supply drop on levels from the last few sales, with just 38,830 bales on offer. Growers passed in 7.2% of bales offered, resulting in a clearance to the trade of 36,027 bales. The season to date has seen 952,848 bales offered which is down 15.7% bales few than the same period in the 17/18 season.

The dollar value for the week was $73.63 million, for a combined value of $1.9 billion so far this season.

The total wool offering over all micron ranges is showing a mixed bag. Any MPG categories broader than 18.5 have presented lower volumes season on season, with the 21 MPG as an example 44% down on last year. On the other hand, finer than 18.5 MPG volume is up all the way to the superfine types. 18 MPG is up by 17% while the 15 MPG is 13.5% on a season to date comparison.

Crossbreds, while limited in offering, were keenly sought this week; it was a strong performance with the 28MPG gaining circa 90 cents in both Sydney & Melbourne. The cardings indicator fell again in all centres with reports of 20 to 25 cent falls in the East, while the West was largely unchanged.

The week ahead

Next week the offering isn’t set to reach too far from this week’s level, with 40,426 bales rostered across the three selling centres. Sydney will be holding it’s designated Superfine Sale.

Looking further ahead, a big drop is on the roster. Week 33 of the selling season is currently set for just 30,981 bales, with 30,000 to follow.

Wherefore art thou heavy lamb?

Posted on by Caitlin Dearden

In the Friday sheep market comment we noted the lack of Heavy Lamb across NSW sale yards since the start of the season. This analysis piece looks at the other two key mainland states across the East coast to see if the pattern of Heavy Lamb throughput is being replicated.

Recap on the Friday Sheep market comment here.

Heavy Lamb yarding levels in NSW have averaged 25,750 head per week since the start of the season. Compared to this time last year NSW Heavy Lamb yarding was averaging over 42,000 head, so we are running nearly 40% below the 2018 pattern. Measuring the volumes across the last five seasons shows that Heavy Lamb throughput in NSW for the same time frame is around 33,600 head, which puts the current sale yard volumes 24% under the long-term seasonal average – Figure 1.

Victorian sale yards have been displaying a similar pattern with the current year’s volume averaging 14,226 head per week compared to nearly 21,000 head in 2018. Although not as severe a difference than in NSW it still represents a drop of 32%. A comparison to the longer-term average over the same period shows Victorian Heavy Lamb yarding levels averaging over 16,600 head per week putting the 2019 pattern nearly 15% below the five-year average – Figure 2.

The story is the same for South Australian throughput levels too, and despite the absolute yarding figures in South Australia being lower than Victoria and NSW, the magnitude of the decline in yarding volumes are like what is being experienced in NSW.

In South Australia Heavy Lamb numbers at the sale yard averaged 2,760 head per week compared to just over 4,800 head in 2018, a drop of 43%. The 2019 pattern for the five-year seasonal trend is also below average running 37% under – Figure 3.

What does it mean/next week?

Given the tough trading conditions last season and the move to flock liquidation due to the dry spell its unsurprising to see the lack of Heavy Lamb in these states. It’s likely to see Heavy Lamb prices remain well supported while the supply remains soft.

Furthermore, it won’t take much to see a kick on in lamb prices should we start to see a more favourable turn around in weather conditions as we head toward the Autumn.

Key points:

  • Victorian and South Australian sale yard throughput levels for Heavy Lamb are mirroring the reduced supply being experienced by NSW.
  • Victorian Heavy Lamb numbers are running 15% below the five-year seasonal average.
  • South Australian Heavy Lamb numbers are more pronounced, trending 37% under the five-year seasonal average.

Weekly Wool Forwards for week ending 01 February 2019

Posted on by Caitlin Dearden

This week has seen a lot more action in the market across both fine and coarse fibers. We saw confidence in coarse wool prices decline slightly this week, after an interesting increase after the Christmas break. The rise in the Aussie dollar didn’t seem to dampen the forward market.

In the 19 micron category, six trades were dealt. Three trades were made for April, two were for 2230¢/kg and one was the first minimum price contract we’ve seen for many months.  The May trade hit at the same price, while the October and November trades were agreed at 2140¢/kg and 2128¢/kg respectively.

In the 21 micron category, five trades were dealt. Most of these were for April and May, the agreed price ranging from 2060¢/kg to 2190¢/kg. The odd one out was for October and agreed at 2060¢/kg.

In the 28 micron category, three trades were dealt, two for May for 960¢/kg and one for June for 970¢/kg.

Over the last two weeks we saw coarse wool bids close to auction levels, but this trend seems to be declining, as bids were below auction rates by more expected margins.

We saw an upswing in the Aussie dollar of nearly 1.5¢, which would usually mean less activity from overseas buyers. It didn’t appear to hold back forwards sales this week, hinting that either further upward movement or supply is a concern.

Sellers happy but buyers wary

Posted on by Caitlin Dearden

On the surface, the wool market appears to be meandering along at a comfortable level, especially if you’re the seller. Buyers, on the other hand, are acting with caution in accepting orders for future delivery.

Another large clearance relative to the last 8 months was evident, with prices pretty much unchanged. However, looking ahead, the consensus is that the challenge of supply falling below normal expectation into the winter is rapidly approaching.

The Eastern Market Indicator (EMI) increased 4 cents on the week, ending at 1,927 cents. The Au$ compared to the last week was slightly weaker at 0.712 US cents. That put the EMI in US$ terms at 1,373 cents, a small drop of just 3 cents (Table 1).

The market in the West wasn’t able to sustain its level, that’s despite nearly 1,000 bales fewer hitting the market compared to last week. The Western Market Indicator (WMI) fell over the week to end at 2,092 cents, down 13 cents on last weeks close and all MPG’s lower.

Supply was down on previous sales, with 41,757 bales on offer. Growers passed in 9.6% of bales offered, resulting in a clearance to the trade of 37,749 bales. The season to date has seen 908,332 bales offered which is 177,718 bales few than the same period in the 17/18 season.

The dollar value for the week was $78.1 million, for a combined value of $1.82 billion so far this season.

We continue to see a divergence of demand for good quality wool with good measurements, compared to wool that has poorer measurements, generally as a result of the drought. Wool that was presented with low staple strength and high mid breaks again struggled to find buyer support this week. On the other hand, wool exhibiting high quality, high staple strength and low mid breaks were keenly sought.

Crossbreds gave up some the gains that were recognised over the last couple of weeks. 26MPG wool was the most affected, losing 35 to 40 cents while demand for 30-32 MPG saw increases. The cardings indicator fell 15 to 45 cents across eastern and western markets.

The week ahead

Next week the offering is due to be lower again, with 40,629 bales rostered across the three selling centres. The trend is set to continue for week 32 with 37,575 bales rostered, and 38,242 the following week.