Category: Wool

Exporters would be pleased with the final selling week; a solid finish before the break provides opportunity to write new orders for the re-start in 2019.

The market rose on each of the selling days, providing a sense of stability to an otherwise volatile ride for the wool market in 2018.

The Eastern Market Indicator (EMI) rose, ending the week at 1,862 cents. The Au$ was slightly stronger, closing at 0.723 US cents. That put the EMI in US$ terms at 1,346 cents, a gain of 10 cents (Table 1).

In the west, the Western Market Indicator (WMI) also rose over the week to end at 2031 cents.

Compared to the original roster posted last week, 46,003 of the 48,700 bales intended for sale this week came to the market. The stronger market meant growers only passed in 7.6% of bales offered. This resulted in a clearance to the trade for the week of 42,529 bales (Figure 2). In the auction weeks since the winter recess, 618,752 bales have been cleared to the trade. For the period up to the Christmas break, on average almost 9,500 per week or 181,400 fewer bales have been cleared to the trade compared to the same period last year.

The dollar value for the week was $83.88 million, for a combined value of $1.56 billion so far this season.

The large crossbred offering again resulted in a mixed result, with early sales for the weak softer before improving by the end of the week.

The oddments market again fell between 30 and 50 cents with Fremantle most affected.

The week ahead

This is the last sale for 2018, with a three-week recess.

The strong finish in the auction to 2018 bodes well for next year, although there are mutterings from exporters that buying orders are spasmodic and on a “just – in – time” basis.

Of note is that the forward market activity is pointing to a solid start to 2019 also.

Last week we saw the wool market settle and this week was much the same for the Merino market. Although, that can’t be said for the whole wool market, the crossbred section ran to it’s tipping point and conceded significantly on previous levels.

The Eastern Market Indicator (EMI) fell slightly, ending the week at 1849 cents. The Au$ was weaker, closing at 0.723 US cents. That put the EMI in US$ terms at 1,336 cents, a loss of 25 cents (Table 1).

In the west, the Western Market Indicator (WMI) was unchanged on the week at 2009 cents.

Compared to the original roster posted last week, 38,315 of the 39,500 bales intended for sale this week came to the market. The solid market meant growers only passed in 10.3% of bales offered. This resulted in a clearance to the trade for the week of 34,365 bales (Figure 2). In the auction weeks since the winter recess, 580,389 bales have been cleared to the trade.

The dollar value for the week was $69.98 million, for a combined value of $1.47 billion so far this season.

The crossbred sections rally came to an end this week. Wool greater than 30 micron lost between 50 and 130 cents. AWEX reported that the sharp reduction in price was met with firm seller resistance with nearly 20% of crossbred wool being passed in.

Merino fleece had a solid week, particularly in the North. Most microns posted small increases.  The oddments market fell between 10 and 20 cents.

The week ahead

Christmas is just around the corner, at least for the wool market, with 1 more week of sale prior to the break. 48,777 bales are on offer across the three selling centres on Wednesday and Thursday.

Increased activity noted in the wool futures market this week with seven contracts traded in total through mid and course fiber categories.

The 19 micron fibres had one contract traded for January 2019 for 2160¢.

21 Micron fibres had two contracts traded. 12 December 2018 at 2,125¢ and March 2019 at 2100¢.

28 micron fibres saw two contracts traded for March and April 2019, both at 900¢. Similarly, 30 micron fibres saw two contracts traded for March and April 2019, both at 730¢.

No minimum price contracts or 18 micron futures contracts were traded this week.

Probably the right result this week in the wool market, where after the turbulence of the previous weeks the market had a settled tone to it.

The two volatile aspects were the strengthening Au$ and the crossbred section where significant demand saw this end of the market rally strongly.

The Eastern Market Indicator (EMI) improved marginally by 2 cents or 0.1%, ending the week at 1,860 cents. The Au$ was stronger by almost 1.0%, closing at 0.732 US cents. That put the EMI in US$ terms at 1,361 cents, a gain of 1% or 14 cents (Table 1).

In Fremantle, the market returned a steady result with the Western Market Indicator (WMI) easing 7 cents to end the week at 2009 cents.

Compared to the original roster posted last week, 34,513 of the 36,000 bales intended for sale this week came to the market. The solid market meant growers only passed in 7.6% of bales offered. This resulted in a clearance to the trade for the week of 31,883 bales, 1863 more than last week (Figure 2). When we look back to the 2017 season, for consecutive weeks 15,000 fewer bales have been sold.

The dollar value for the week was $60.9 million, for a combined value of $1.34 billion so far this season.

In the auction weeks since the winter recess, 546,024 bales have been cleared to the trade, 156,886 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year continues to grow and now sits at 9,228 bales per week fewer.

This week it was the Crossbred sections time to shine, Melbourne 28 MPG up 10% for the week with reports of 80 to 100 cent rises as buyers scrambled to obtain wool.

Across the board the Merino section held the line in the face of the stronger Au$, however, there was a varying demand observed for poorer styles and wool showing the effects of the drought. The lower NKt and poorer yielding wool is struggling due to the excessive volumes coming through. This is unlikely to change anytime soon.

The week ahead

With just 2 weeks of selling prior to the Christmas break 39,500 bales on offer across the three selling centres on Wednesday and Thursday.

A steady result would bode well for the New Year opening and what will be an interesting balance between a reduced supply and a healthy appetite for wool from processors.

Last week we reported the market managed to find a point to stabilise and post a modest rise. It was a different story this week, with a strong market evident from the outset and all categories participating.

Buyers seemed to blink first and they bid up strongly for a smaller offering as recent high pass-in rates seemed to cause concern for mill supply.

The Eastern Market Indicator (EMI) gained a whopping 77 cents or 4.3%, ending the week at 1,858 cents. It has now regained the losses of the past three weeks. The Au$ was marginally softer, closing at 0.725 US cents. That put the EMI in US$ terms at 1,347 cents, a gain of 4% or 52 cents (Table 1).

In Fremantle, the strong demand was also evident with the Western Market Indicator (WMI) rising an impressive 81 cents to end the week at 2016 cents.

Compared to the original roster posted last week, only 31,889 of the 35,000 bales intended for sale this week actually came to the market. The reduced offering producing a stronger market meant growers only passed in 5.9% of bales offered. This resulted in a clearance to the trade for the week of 30,020 bales, 1467 fewer than last week (Figure 2). When we look back to the 2017 season, this week saw 15,000 fewer bales sold, reflecting growers decision to hold wool out while the market was falling as well as reduced supply caused by the drought.

The dollar value for the week was $60.9 million, for a combined value of $1.34 billion so far this season.

In the auction weeks since the winter recess, 514,141 bales have been cleared to the trade, 141,857 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year continues to grow and now sits at 8,866 bales per week fewer.

The most impressive moves came in the mid-micron categories, while the carding indicators rose strongly for the second week with increases between 23 cents in Fremantle and 80 cents in Sydney.

The week ahead

The roster for next week shows 36,000 bales on offer across the three selling centres on Wednesday and Thursday. The following weeks are looking at 36,500 and then 40,000 bales.

The question for the market is are we on another “bull run”, or was this week a “dead cat bounce”?

Despite this week’s offering being the largest we have seen in a long time, the market managed to find a point to stabilise from the incessant falls. Sydney saw support for the broader microns, Melbourne found strength in the finer microns and mid fibres performed best in Fremantle, resulting in an overall steady week.

The Eastern Market Indicator (EMI) gained just 5 cents, ending the week at 1,781 cents. The Au$ lost some ground, closing at 0.727 US cents. That put the EMI in US$ terms to 1,295 cents, a gain of just 3 cents (Table 1).

In Fremantle, results were fairly mixed with the Western Market Indicator (WMI) rising just 4 cents to end the week at 1935 cents.

Compared to the original roster posted last week, only 35,326 of the 39,883 bales intended for sale this week actually came to the market. Growers appeared more confident in the markets level, passing in 10.9% of bales. This resulted in a clearance to the trade for the week of 31,487 bales, 6,032 fewer than last week (Figure 2). When we look back to the 2017 season, this week saw 36% less bales sold.

The dollar value for the week was $62.05 million, for a combined value of $1.28 billion so far this season.

In the auction weeks since the winter recess, 484,121 bales have been cleared to the trade, 126,565 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year continues to grow and now sits at 8,437 bales per week fewer.

It was the crossbred and oddments sectors that provided the market with the real boost. Crossbreds saw gains of 5 to 25 cents, while the carding indicators rose between 70 and 120 cents across the three centres.

The week ahead

The roster for next week shows 35,334 bales on offer across the three selling centres on Wednesday and Thursday. The following weeks are looking at 37,540 and 36,778 bales.

Considering the market managed to cease it’s decline even with one of the largest weekly offerings in recent times, there is optimism for the coming weeks.

While AWEX comments on Thursday noted that the market had steadied there is no denying the market again suffered from a lack of buying demand. Reduced offering and falling prices across the board were the end result of what has been a perplexing 6-week period.

The Eastern Market Indicator (EMI) fell 76 cents to accumulate a 200 cent fall over the past 4 weeks, ending the week at 1,776 cents. The Au$ was again stronger up almost 2.1%; the EMI in US$ terms fell by 29 cents to end the week at 1,293 US cents (Table 1).

This puts the US$ EMI back exactly where it was one year ago, and with a dramatically reduced supply year-on-year the conclusion can only be that demand has fallen – at least for the immediate timeframe.

In Fremantle, the Western Market Indicator (WMI) lost ground, falling 74 cents on the back of the last two week’s 89 cents falls to end the week at 1931 cents.

Compared to the original roster posted last week, only 32,000 of the 35,000 bales intended for sale this week actually came to the market. Again, growers were unimpressed with the market and passed in 20.9% or 6,734 bales. This resulted in a clearance to the trade for the week of 25,455 bales, 4,359 fewer than last week.

The dollar value for the week was $48.9 million, for a combined value of $1.22 billion so far this season.

In the auction weeks since the winter recess, 452,634 bales have been cleared to the trade, 109,043 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year continues to grow and now sits at 7,788 bales per week fewer.

Of note is that over the past 7 weeks the EMI has fallen 237 cents or 11.7%, while the clearance to the trade has been 82,000 bales fewer than the same period last year.

The only bit of positive news from the market this week was AWEX reporting that on Thursday there was evidence that buyers were reluctant to pass up wool with good specifications resulting in some “resolute bidding” for these types.

Cardings again struggled to find support, with the Melbourne sale noting a further 6.4% fall.

According to the AWEX roster, the next three weeks less than 40,000 per week are predicted, with 39,883 bales next week.

After what looked like a steadier market last week, the opening on Wednesday was again a case of an accelerated decline as buyers waited for the bottom of the market to appear. Again, it would be a brave call to predict a rally next week, the best result would be a cessation of the decline.

Wool producers did their best to support the market this week; of the 40k bales rostered only 35,700 were eventually offered for sale with a further 5,900 passed under grower’s reserve. Despite this, the market again fell.

The Eastern Market Indicator (EMI) fell 20 cents on top of the last two week’s 149 cents fall, to end the week at 1,854 cents in AU$. The Au$ rose almost ¾ of a cent; the EMI in US$ terms fell by 5 cents to end the week at 1,322 US cents (Table 1).

In Fremantle, the Western Market Indicator (WMI) lost ground, falling 28 cents on the back of the last two week’s 137 cents falls to end the week at 2005 cents.

Compared to the original roster posted last week, less than 75% of the 40,000 bales intended for sale this week were in fact cleared to the trade. Growers passed in 16.6% or 5,970 of the 35,784 bales that were finally offered for sale. This resulted in a clearance to the trade for the week of 29,814 bales, 3,500 more than last week.

The dollar value for the week was $62.06 million, for a combined value of $1.17 billion so far this season.

In the auction weeks since the winter recess, 427,179 bales have been cleared to the trade, 91,600 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year continues to grow and now sits at 7,050 bales per week fewer (Figure 2).

Of note is that over the past 3 weeks the EMI has fallen 169 cents or 8.3%, while the clearance to the trade has been 45,000 bales fewer than the same period last year.

This is a serious correction with the EMI giving back 12% since it peaked mid-August at 2116 cents.

19 MPG and broader types while also easing have been less affected, with 19 MPG and finer not only feeling the brunt of the general market correction, but also the increased volume of drought influenced fine wool has tested buyer’s capacity.

Cardings have plummeted in recent weeks, going from being the “star” performers to now almost unwanted. The Melbourne Carding indicator has fallen from the August peak of 1558 to this week close at 1116, a 28% retracement. Despite the more affordable price, 25.5% of offered Cardings did not reach growers reserve, with only 3,819 of the 5,120 bales offered sold.

The week ahead

According to the AWEX roster, the next three weeks less than 40,000 per week are predicted, with 35,600 bales next week. Growers have decided they are comfortable holding wool so its unlikely this number will get to the auction next week.

While this week the fall was reduced compared to the past two weeks, it is still too early to call the bottom of this recent correction.

If last week was bad for wool prices, it turned out that it was only the start of the fall. This week, no segment was spared, and the full force of the correction was felt causing the market to fall dramatically.

The Eastern Market Indicator (EMI) fell 96 cents on top of last week’s 53 cents fall, to end the week at 1,874 cents in AU$. This is the lowest close since May. Despite the Au$ easing almost ¾ of a cent, the EMI in US$ terms was also hit hard, dropping 78 cents to end the week at 1,327 US cents (Table 1). The last time the US$ EMI closed below 1,350 was December 2017.

In Fremantle, the Western Market Indicator (WMI) lost ground, falling 61 cents on the back of last week’s 76 cents fall to end the week at 2033 cents.

Again, sellers adopted a strong position to the falling market, passing-in 23.6% or 8,150 of the 34,522 bales that came forward. This resulted in a clearance to the trade for the week of 26,372 bales, the lowest sale clearance for this season.

This again produced a reduced dollar value for the week of $57.23 million, with a combined value just ticking over the $billion mark to $1.10 billion so far this season.

In the auction weeks since the winter recess, 397,365 bales have been cleared to the trade, 76,273 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year continues to grow and now sits at 6,356 bales per week fewer (Figure 2).

The market peaked in August when the EMI topped out at 2116; since then the retracement has been of the order of 11%, while the 19 MPG has pulled back 9%. The last 2 weeks have been terrible for the wool market, almost 30,000 bales fewer sold compared to year-on-year figures, and the EMI has lost 7.8%.

For the second consecutive week, the superfine end has been hit hard, as the weight of drought-affected wool has caused the 16 & 17 MPG’s to pull back 15% from the August peak. Cardings fell out of bed this week losing a massive 11% in Melbourne and have come back from their August highs by 26%.

The week ahead

The offering next week is rostered at 40,000 bales; this week 7% of the rostered offering was withdrawn prior to sale so its most unlikely this number will get to the auction next week.

As buyers try to anticipate the bottom of the market, the uncertainty doesn’t give much confidence that the market will stabilise next week.

This week’s market posted a timely reminder that wool markets are not one dimensional, that is less supply does not always equate to increasing price. Supply fell and at the same time prices across the board retreated back to August levels.

The Eastern Market Indicator (EMI) fell a further 53 cents on top of last week’s 21 cents fall, to end the week at 1,991 cents in AU$. The EMI in US$ terms was cushioned to some degree by a slightly stronger Au$. The EMI dropped 25 cents to end the week at 1,405 US cents (Table 1).

In Fremantle, the Western Market Indicator (WMI) lost ground, falling 76 cents or 3.5% to end the week at 2094 cents.

Sellers reacted strongly to the cheaper market, passing-in 19.4% or 7,013 of the 36,084 bales that came forward. This resulted in a clearance to the trade for the week of 29,071 bales, the third lowest sale clearance for this season. Of note was that on Thursday Fremantle passed-in 33% of all offered bales, while in Melbourne 31.6% of fleece didn’t make growers reserve on Thursday.

In Fremantle, AEX reported that grower reaction to the lower price of Wednesday resulted in 13% being withdrawn prior to sale and a further 40% of fleece lines failing to meet grower reserve.

This again produced a reduced dollar value for the week of $67.95 million, with a combined value just ticking over the $billion mark to $1.05 billion so far this season.

In the wool auction weeks since the winter recess, 370,993 bales have been cleared to the trade, 60,000 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year now sits at 5,500 bales per week fewer (Figure 2).

Looking to the same sale of last season, this week’s clearance was a massive 14,000 bales fewer, and for the rest of 2017 up to Christmas, all selling weeks cleared in excess of 40,000 bales. The weekly average for this season is sitting at 33,700 and is only likely to shrink as the season progresses.

While falls were generally in the order of 1 – 2%, the outlier was the superfine end where the weight of drought-affected wool caused the 16 & 17 MPG’s to pull back 4%.

Cardings were particularly hard hit this week, Melbourne and Fremantle reported the Cardings indicator down 7.5 to 8.0%, while Sydney lost 6%.

The week ahead

The offering next week is rostered at 38,702 bales, which is most unlikely to get to the auction as growers digest this week’s market correction.

The final day didn’t provide any good news as a lead into next week, so we are likely to see a continued easing in the market as buyers try to find sustainable limits.