The AWEX EMI closed the week on 1836c – down 10c at auction sales in Australia this week. The softer tone was a little confusing given the AUD continued to fall across the selling week, however after the past few weeks it is not surprising that the slight correction resulted. In USD, the EMI fell 17c which could be reflecting either the high price resistance, the selection available or possibly the exporters’ funds available. Remembering that the weekly movement is roughly 0.5%, which in my mind could be described as firm.
The selling centres performed slightly differently as the MPG’s slowly aligned towards the end of the week with the Northern market losing more ground than the South and the Western markets.
Reporting the northern market Merino Fleece between 17 and 21 Micron all lost between 5 and 35c.
Skirtings maintained last week’s levels with the lowest VM lots keenly sought after.
Crossbreds were irregular with the 26-28 MPG’s holding firm whilst the 29-32 MPG falling between 20-35c.
Merino Cardings were also fully firm on the past weeks levels.
From the 42,794 bale offering, 94.7% cleared to the trade reflecting the overall bullish market tone.
Forward Market Report: Mike Avery – Southern Aurora Wool
Whilst all micron groups posted losses for the week, they were minor compared to the volatility of the previous months. Crossbreds fell for the first time in 3 months as reached levels closer to their historical relationship to the merinos.
The forward markets held their ground with modest volumes going through, mainly focused on the spring. August 21.0 micron traded at 1840 to 1855 and September 1820 to 1840. These levels are 15 to 20% above the last year’s auction averages. August 2017 21 MPG average was 1600 and September 1550. October traded at 1740 12% above the 2017 level.
Demand forward on the 19.0 is a little more cautious at the current outright levels. Bidding in August was around 1950 and September 1930. This represents an increase of around 5% on lasts August average of 1860. September the increase is a little better with 1930 being 7% about the AWEX 19.0 MPG average of 1800.
Crossbreds traded 28.0 at 840 for November – a rise of 12% on their November average for 2017.
The challenge remains in getting meaningful volumes from the selling side to maintain exporter and processor interest in delivering fair value pricing for growers, enabling them to adequately manage the volatility and risk they constantly face.
The 37.5t traded this week represents less than 1 per cent of the volume presented for auction.
Market Commentary: Next week 38,292 bales will be on offer, and I would assume with the same factors that I mentioned above will be at play, as well as the comment from Mike above in relation to the meaningful offerings and the relatively low volumes of forward wool transacted at these historic price levels. With a little rain across the district, one hopes this is the start of the seasonal change for the better. It is a great time to be in Sheep and Wool.
~ Marty Moses