Tag: Wool

The wool market has now closed for the annual 3-week winter recess, and all industry players would have been pleased with the final sales.

A solid and well supported market leading into a break provides all with confidence, especially wool exporters travelling overseas to visit mills and set in place plans for a new season supply.

The Eastern Market Indicator gave up 13 cents over the week to settle at 1,981 cents AU$ terms (Figure 1).

The EMI was also weaker in US$ terms although not to the same scale as in Au$ terms, closing at 1,462 US cents, down 9 on the week.

Comparing the wool market performance over the season, a 31% lift for the EMI is an excellent result. The bulk of the clip now sits in the 18 to 19 MPG range, and this area showed the least gains at 17 & 22% respectively, while 20 & 21 MPG which has seen continued decline in supply performed best.

Again, sellers exercised restraint, with 11.2% passed in on Wednesday and a further 5.3% on Thursday for a total of 8.5% over the week. Still a significant pass-in rate given the level of the market but well back on the double-digit figures of last week.

An offering of 40,544 bales resulted in 37,095 bales sold, well above the 27,000 averages for June but in line with the season average of 39,000 per week.

The first day saw a continuation of the softer trend of last week before a recovery on Thursday with Fremantle off the market. This was especially evident in the 19 and broader types, all quoted dearer, with the finer types fully firm although 16 & 17 MPG were irregular.

Crossbreds also finished on a solid note; with AWEX noting that better prepared lots sold best. This is now a feature of this market where poorly prepared or unskirted lots are not well regraded and buyers are selective.

Merino Skirtings eased in line with fleece wool, however lines containing >5% VM again were not keenly sought.

Merino Cardings also eased with the Cardings Indicator in Sydney – 17, Melbourne – 29 and -21 in Fremantle.

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.