Week 33: 
The AWEX EMI endured a slight correction falling by 6c and closing on 1812c after last week’s sharp rise. The correction was evident from the auctions opening as buyers immediately felt the pressure of tougher business conditions with their OS customers. The AUD gained over 1c in USD terms for the week which may also have been a factor in the market and interestingly enough the EMI posted a 14c rise in USD terms.

In the northern markets, the 16-16.5μ MPG’s were the only Merino MPG category to post a positive result, 17-19μ lost between 30-40c whilst 17.5μ posted a larger 58c technical correction. The best specified lots which are becoming harder to source were very keenly sought and felt little if any price pressure.
Merino Skirtings followed the fleece prices with the best measured, low VM and best style lots least affected. Heavy VM were cheaper but noticeably irregular.
Crossbreds MPG’s posted positive rises on last week’s recovery with 25-28μ MPG’s increasing between 2 and 13c.
Cardings were more settled in the northern and southern centres at their new level, however the western MC fell 59c.

Forward Market report: Michael Avery from Southern Aurora Wool reports – “A strong Aussie dollar combined with lower demand triggered by the Chinese New Year saw spot auction price retract from their record levels. This impacted on forward prices both in price and volume. This was most evident in the fine wools as exporters question the ability of the market to sustain these levels into the autumn and beyond. Some demand destruction is to be expected especially in the micron groups where supply is not as constricted. This supply imbalance has seen a movement of 100 cents in the 19.0 to 21.0 spread since January (from 342 cents to 242 cents). Supply of 21.0 remains tight this was reflected in the solid forward prices being received for the autumn with March trading at 1845, April 1825 and May 1820. Most exporters and processors are anticipating a continuation of the volatile conditions in the short term ahead of a correction back to a longer-term trend line. Much will depend on the impact of the sustained price rally on demand and the oscillating AUD.”

Commentary: This week, the auction sales totalled $78.59m (a weekly bale average of $2004.80/bale) which brings the season to date total to $2134.61m. ($1,871.64/Bale), as we move further into the Chinese New Year holiday period.
In previous years, this period has produced some price uncertainty however, given the pressure on supply this year may not suffer too badly. Despite the irregular market environment over there is still good underlying signals for the short term.
As Mike Avery comments above, the buyers are quick to switch off their interest in the forward offers at any sign of negative news. The trick for selling forward into a market that is already scan for liquidity, is to sell into a market with a positive tone.
Next week’s offering is 41,815 bales which I believe will be at the mercy of the value of the AUD, finance available to the exporters and orders for the better style lots.
I know I keep saying it, BUT here it is again – ”It is a great time to be in Sheep and Wool”.

After the tumultuous ups and downs witnessed since beginning of the calendar year, the Australian Wool Market performed in a more subdued manner in Week 33.
There was more wool on offer than the previous sale, with 42,519 bales on offer to the trade nationally, including Tasmanian wools being featured in Melbourne. Despite the slight increase in quantity, competition remained very high.

Noticeable, was the fact that wools carrying slight faults, started to receive smaller discounts as buyers focussed more and more on length and strength results. Main interest was again focussed on wools with very low mid breaks and wools possessing Cvh values below 45. These lots are becoming increasingly difficult to quote, as some buyers adopt a “buy at best” attitude in the sale room.

The opposite was true of wools with high mid breaks, these wools were heavily discounted, and the increased quantities of these types was a large factor in the Micron Price Guides recording falls. Overall, the Benchmark Eastern Market Indicator (EMI) posted a negligible 6 cent drop, closing at 1812 cents. Worth noting however, is due to currency movements, when viewed in USD terms, the EMI recorded a 14 cent rise to close at 1437 cents. The crossbred sector for the first time in many weeks managed to outperform the merinos. General price increases of 5 to 15 cents were felt across the board, helping the EMI from falling further than it did.

Buyer interest was again centred on the better prepared lines, earning these wools the greatest price increases. The oddment sector performed with mixed results. The Eastern Markets managed to post rises for the week. However, the Western region lost ground, resulting in the three carding indicators reducing by an average of 9 cents. ~ Marty Moses


Market Report S33.17 – PDF