Category: Wool

The big upward move in the wool market last week and the return of Fremantle resulted in an increased offering this week, with the market easing slightly.

The end of financial year sale resulted in finer types retreating by 20 to 40 cents.

The Eastern Market Indicator gave back 17 cents over the week to settle at 2,056 cents in AU$ terms. AWEX noted this was 531 cents above the corresponding market last year, almost a 35% increase (Figure 1).

Medium wool is trading at historically close levels to finer types, with the 21 MPG in Melbourne closing the week at a record 2350 cent, just 19 cents below the 19 MPG. (Figure 2)

This lends support to the theory that while demand is strong and marketing efforts have been positive, supply is causing buyer concern.

The Australian dollar was stable at US$ 0.73, resulting in the EMI closing slightly softer at 1,513 US cents, US$0.13 below last week.

Despite the record levels, growers lifted their Pass-In rate to 6.1% (last week 2%) which meant 29,830 bales were cleared to the trade.

To summarise the year, 1,803,594 bales were offered, 48,000 more than last year, with Melbourne offering 60,000 more, Sydney up by 16,000 and the Fremantle offering 29,500 fewer.

This resulted in $3.434 billion turnover for the year, while the average number of bales sold per week has been 39,253.

The week ahead

Next week is the first sale of the new financial year and all 3 selling centres are selling. A much larger offering of 43,232 bales are rostered for sale.

This will test the market however the recent trend of growers being prepared to Pass-In wool when the market eases should provide support.

Sometimes good things come in small packages. Well at least was the case in the wool market this week. Fremantle was on recess again, leaving the East Coast to carry the weight and deliver the smallest national offering in nine years at just 20,904 bales. As a result of the lower supply, prices rallied to new heights.

The Eastern Market Indicator pushed a whopping 52 cents higher on the week to settle at 2,073 cents AU$ terms. This was 46 cents, or 2.3%, above the record reached at the end of May (Figure 1). This week saw the Australian dollar fall even further. At 0.73, its trading at 2.6% below levels seen this time last year and at a level we haven’t seen since December 2016. This kept the price of our wool from a foreign buyer’s perspective stable, which closed the week slightly softer at 1,526 US cents.

Those that had wool to sell had confidence in the strong market. The pass in rate was at 2% which meant 20,685 bales were cleared to the trade.

All categories of Merino fleece posted gains on the week. Fine fibres of 18 to 17 micron saw rises in the range of 20 to 80 cents. Medium fibres were the real winner, gaining 40 to 100 cents. The spread between 19 and 21 micron prices drifted wider, after last week we saw them settle in the same range.

The finer crossbred microns saw increases averaging 40 cents which have lifted the MPGs to all new highs. Broader crossbreds were relatively unchanged on last week.

Merino Skirtings gained 20 to 30 cents in the North but largely held to last week’s levels in the South. Merino Cardings also saw rises of 20 to 30 cents.

The week ahead

Next week is the final sale of the season and all 3 selling centres will be back in operation. A total of 32,528 bales are rostered for sale, significantly lower than the last sale of the 16/17 season. We don’t tend to see prices push higher in the last sale but that being said this season has been anything but typical.

The wool market mended last week’s losses to see a general lift across medium and coarse fibres.  Buyer attentions were again diverted away from the finer microns, which saw the price differential between medium and broad microns narrow significantly.

The Eastern Market Indicator rose 10 cents on the week to 2,021 cents in AU$ terms.  This was reversed in US$ terms, dropping 10 cents to settle at 1,528 cents (Figure 1). Fremantle returned to sale this week and played its part in the strength of the market, with the Western Market Indicator pushing 21 cents higher to 2,188 cents.

With the West back into play, there were 28,029 bales on offer. The pass in rate was barely unchanged at 3.4%, meaning 27,076 bales cleared to the trade (Figure 2).

Fine fibres between 17 to 18.5 micron were subject to losses averaging 10 to 20 cents. It was clear from the outset of trading that buyer interest was on the broader categories. 19 to 22 micron fibres saw price rises of between 10 and 40 cents on the week. The spread between medium micron categories has been narrowing from the highs early in the season and this week by the end of the sale, the difference between 19 and 21 micron in the south was non-existant, both settling at 2295 cents (Figure 3). AWEX noted that in some cases, coarser lots were actually receiving better prices than similar wool with a finer micron.

Results for crossbred wools were mixed. 26 micron pushed up to 20 cents higher while broader categories saw falls down to 10 cents.

Merino Skirtings saw a similar outcome to fleece with finer microns seeing lower prices in the range of 20 to 40 cents while broader microns managed to find some support to rise 10 to 20 cents. Oddments were again in short supply which saw the cardings indicators rise on average 4 cents.

The week ahead

Fremantle is taking another break next week leaving just 21,326 bales rostered for the second last sale of this season in Sydney and Melbourne. The final week of sale currently forecasts 33,810 bales on offer.

For the last month the wool market has gone from strength to strength, but alas, the upwards stream has come to a halt. That is, unless you look from a US$ perspective. Despite the small offering due to no sales in Fremantle, most categories retracted from the outset on Tuesday.

In Australian dollar terms the Eastern Market Indicator (EMI) pulled back 16 cents on the week to close at 2,011 cents. The news wasn’t all bad though, the Aussie dollar lifted back above US$0.766 during the week on the back of strong GDP data to trade at a six-week high. This lent to the EMI in US$ terms lifting 14 cents to hit a new record of 1,547 cents on Wednesday, only to retract back 6 cents to 1,538 cents on close (Figure 1).

26,942 bales were offered to the trade this week from the two sale centres. This was the smallest offering that we have seen this season. 3.6% of the offering was passed-in, meaning 25,973 bales were cleared to the trade.

Finer microns experienced the largest losses in the falling market. 17 to 19 micron wools were down on average 40-50 cents in both Sydney and Melbourne. AWEX reported that 21 micron and coarser wool attracted very strong demand. As a result, medium fibres saw negligible drops to 15 cent gains across the market.

Most crossbred categories experienced slight corrections of up to 15 cents. Merino skirtings were not exempt from this week’s losses, generally declining 20 to 40 cents.

Unlike previous weeks, buyers weren’t willing to stand for poorly prepared lines. Discounts were received on lower style and spec lines.

Cardings were in short supply and managed to hold onto last week’s prices.

The week ahead

Next week we are back to a full roster with sales in Sydney, Melbourne and Fremantle. 28,956 bales are expected for week 50 of the selling season (Figure 2).

Who would have thought that 2,000 cents were possible for the EMI, or that only the 25 MPG and broader would sit below the 2000 cent level?

This wool selling season the EMI has lifted a massive 38%. In June 2017, it was quoted by AWEX at 1472 cents and this week settled at 2027 cents.

At the Campbelltown Show last week (by the way it was the 180^th consecutive show, a fantastic effort by present and past show presidents and committee to achieve this over such a long time), a story was recounted to me that a couple of years ago at an AWI meeting one of the members suggested that 2000 cents was possible in 2018!

He was told by others at the meeting that while possible, don’t tell anyone because it sounds too far-fetched!

This week another small offering came forward, with just 30,329 offered to the trade. At a pass in rate of 2.3%, this meant 29,729 bales were cleared. This is 11,000 bales fewer than the weekly average of almost 41,000 bales for this season.

AWEX reported that buyers “had to work hard” to secure their volumes, and showed little regard for style and specifications. As supply has declined the discounts from earlier in the season for lower style and spec wool have declined.

It was also a new record for the EMI this week in US$ terms, breaking the previous level of 1504 set in June 2011, the increase this week of 32 cents pushed the US$EMI to 1,533 cents (Figure 1). The Australian dollar had a stable week, trading at US$0.757.

The Western Market Indicator (WMI) rose 48 cents on the week to post another record of 2167 cents.

To add some perspective, on this selling week, 20 years ago (1998) the 19 MPG was 945 cents and the 21 MPG 639 cents; they have lifted 147% & 254%, respectively (Table2).

Fine wool volumes have risen relative to the rest of the clip over this period and consequently, medium merino wool has declined. This is reflected in the price movements with the larger % improvements across the traditional medium to broad MPG categories.

The stand-out performer over this period is the Cardings sector; a 340% lift over 20 years is quite remarkable and signals strong demand for shorter wool.

The week ahead

Fremantle market has next week off, so only 27,270 bales are rostered, with 32,000 and 26,000 listed for selling weeks 50 & 51.

We are in unchartered waters so predictions are difficult, but it is hard not to be excited by this market. As a knowledgeable wool person in Tasmania said, “I would rather be selling than buying in this market!”.

Another week, another record. The wool market was again lit up with green across the board. But where one wins, one must loose. We’re seeing the effects of what has been a remarkably strong season play out on supply, and this means buyers are having to fight it out.

This weeks offering was a hefty 6,310 bales lower than last week, with just 30,053 offered to the trade. At a pass in rate of 2.2%, this meant 29,392 bales were cleared. AWEX reported that lower yielding, lesser style wools were again prominent. Despite this, buyers were willing to pay up to secure stock, indicating an air of nervousness about the levels of supply.

The Eastern Market Indicator (EMI) gained 20 cents on the first day of selling, and lifted a further 19 cents on Thursday to close at 1893 in Au$. Smashing last week’s record to an all new high. Records appear to be the new norm for the wool market. The weeks rise was on par in US$ terms, increasing 39 cents to hit 1,501 cents (Figure 1). This was supported by a stronger Australian dollar, trading at US$0.757.

There was little variation in the market movements between microns this week. 50 to 80 cent increases were typical for 17 to 22-micron wools in Sydney and Melbourne, although fine wools were the stand out performer in Melbourne this week with gains up to 90 cents.

The Western Market Indicator (WMI) rose 39 cents on the week to 2119 cents.

Merino skirtings made an improvement on the week as well. Well-formed lines received gains of 60 cents. Cardings had a strong week as well with the indicators up on average 30 cents.

Crossbreds were the only category that failed to see prices increase all round. While the 26 micron rose 42 cents on the week, 28 and 30 micron fibres fell back in the range of 5 to 10 cents.

The week ahead

The roster for the next few weeks points to the offering remaining thin. Next week just 31,336 is on offer, while the following week, a skimpy 25,119. This is well under the offering during the same weeks last season.

If this week’s bullish market, driven by buyer uncertainty is an indication of how the market is feeling, we could certainly see it reach higher levels in the coming weeks.

The wool market set another record this week, it is looking settled at these previously un-attained price levels. Probably another record was set when wool producers in the Sydney catalogue sold 99.9% of bales offered in the first day. Growers are enjoying this market!

After last week clearing 40,000 bales, this week only 35556 bales were cleared to the trade, from a total offering of 36398 bales. The impact on the market was significant, with the Eastern Market Indicator (EMI) lifting by 21 cents on the first selling day and a further 31 cents on Thursday to see it close for the week at 1943 cents, while in US$ terms the EMI found an additional 49 cents to settle at 1462 cents (Figure 1).

The AU$ was slightly stronger to settle at $0.75, while the Western Market Indicator (WMI) gained 62-cents to 2080 cents.

Many of the MPG’s only started in 2011, so comparisons of the market are often made from this date. Currently, all indicators 28MPG and finer are at their record high levels since 2011. This is a remark able market.

Merino skirtings posted improved levels each day and closed the week on a very solid note.

Merino Cardings had another good week, all centres showing stronger prices with an average lift of 22 cents.

The week ahead

Next week fewer than 32,000 bales are offered, a decrease on this week’s sales.

The large clearance in the first week after Easter provided an insight into the current demand and this has certainly carried through in subsequent weeks. It must be keeping exporters awake, will the make continue to rise, consolidate at current levels or retreat after consecutive increases.

The wool market bounced out of the blocks this week, from outset the buyers were forced to compete vigorously to secure any volume. A weaker Au$ assisted but there was no denying the urgency of the buyers as they bid up.

The Fremantle market got a mention last week, and the positive sentiment it left on the previous weeks market certainly carried through to the open of this week.

With a smaller offering compared to last week of 42,794 bales, the Eastern Market Indicator (EMI) gained 55 cents to 1891 cents, while in US$ terms the EMI was up 33 cents over the week to settle at 1414 cents (Figure 1). In the Fremantle sales, the Western Market Indicator (WMI) rallied 45 cents on the opening day and a further 21 cents on Thursday to end the week at 2018 cents. This easily surpassed the previous record of 1965 cents.

The AU$ was softer, trading around the US$0.748 mark, slipping below the US$0.75 cent support mark.

In line with the stronger market in general, the pass in rate fell to 2.3%. Growers and brokers stepped up and delivered to a strong market resulting in 37,842 bales eventually sold, with only 886 bales passed-in.

Crossbreds also posted gains although more restrained than the rest of the market, while the cardings also felt the increase in the general market and lifted.

Skirtings were reported extreme for selected lots, with reports of 40 to 50 rises at the open which carried through the week.

With just over 36,956 bales sold this week, (season’s average 41,541) we expect supply will continue to be front and centre in buyer’s minds. There are 37,496 bales rostered for next week, however the roster falls to an average of 34,793 bales for the following weeks.

The week ahead

The demand looks solid, supply is tight and getting tighter and the currency looks like it wants to help also. This all points to a positive short-term outlook for wool.

We can only repeat last week’s outlook, this is a good time to be selling wool and it looks like the market still wants to improve.

The wool market opened the week with a continuation of the softer trend of last week, but on Thursday demand returned, and the market looked to have a completely different tone.

This was best reflected by activity on the Fremantle auction floor; the close of last week in Fremantle was definitely “bearish”, while this week it acted like the “bull”, closing strongly.

We take more notice of the Fremantle market when forming a view of next week’s market, with its 2-hour time difference a strong finish is positive for next week, while a weak finish doesn’t provide a lot of confidence going forward.

With a similar offering to last week of 42,794 bales, the Eastern Market Indicator (EMI) lost 10 cents to 1836 cents, while in US$ terms the EMI gave up 17 cents over the week to settle at 1381 cents (Figure 1). In the Fremantle sales, the Western Market Indicator (WMI) slipped 10 cents on the opening day before fully recovering on Thursday to end the week up 3 cents to 1952 cents.

The AU$ held steady around the US$0.75 mark, after slipping below the US$0.76 cent mark last week.

In line with the slightly softer market in general, the pass in rate lifted to 5.3%. The varied pass-in rate makes interesting viewing; in Sydney it was 3.2%, Melbourne 5.3% while in Fremantle, despite the stronger market, growers were prepared to pass-in 8.2% resulting in 40,500 bales eventually sold.

On the back of last week’s currency induced rally that provided wool sellers with new high’s, this week’s market can be taken as a positive with little resistance to the market levels despite the Wednesday easier market.

AWEX reports that buyers are finding it difficult to “average” their purchases with the increasing percentage of lower yielding and poorer style wools offered. Of course, this is making more attractive any lots that are of good style and yield. Again, these types were reported as attracting strong competition.

There was an interesting comment in the AWEX Sydney report on Wednesday; “19 microns and finer had good support for the Non-Mules and Pain relief lots”, perhaps reflecting specific demand for these wools. For some time, we have been interested in detecting any premium for non-mulesed or pain relief identified lots; this is a rare comment from AWEX that it was noticeable in the auction.

Crossbreds retreated after five weeks of positive gains, while the cardings were generally unchanged except for W.A. where the correction was a re-alignment with Eastern markets.

Skirtings were reported as steady for the week, although again the AWEX report contained a proviso that lots with less than 3% VM were keenly sought.

With just over 40,000 bales sold this week, (seasons average 41,868) we expect it will be difficult to retrieve sales above this level until the Spring. There are 38,200 bales rostered for next week, however the roster falls to an average of 35,000 bales for the following weeks. With the average clearance since January of almost 42,000 bales, the seasonal average can’t help but fall in coming weeks.

The week ahead

The market had a go at correcting the strong recent weeks, but by week’s end it was back to business as usual.

This along with tightening supply (38,000 rostered for next week) bodes well for the immediate future of wool prices in general.