By Olivia Agar & Matthew McAdam | Source: Reimann, AWEX, Mecardo
It’s been a week of major comebacks. While the wool market lift might not be the most celebrated national victory of the week, records were hit for six to make a spectacular recovery. Goodwill discussions between China and the US on trade appear to have significantly boosted buyer confidence and resurged competition.
The Eastern Market Indicator (EMI) lifted 170 cents or 12% on the week, to finish at 1,535 cents. This correction was an all time record for the highest weekly increase of the EMI and has pushed the EMI back where it was a month ago. The Aus$ also lifted to US $0.687. This saw the EMI in US$ increase 125 cents to end the week at 1,056 US cents.
Western Australia made the most staggering recovery. The Western Market Indicator rose by 242 cents to close at 1,625 cents (Figure 1). The daily gain of 198 cents was the largest increase in a day since records began according to AWEX.
All microns and types saw strong price rises but broader Merinos were most keenly sought after. 19.5 to 21 MPGS rose 175 to 305 cents across the three selling centres. Crossbreds saw further gains on last week in the order of 65 to 115 cents. The Merino Cardings Indicators also took a slice of the action, rising 90 to 185 cents on the week.
21,839 bales were offered to sale and just 6.2% passed in. This saw 20,488 bales cleared to the trade (Figure 2). There have been 94,403 fewer bales sold this season compared to the same period last year. This is an average weekly gap of 11,800 bales.
The dollar value for the week was $34.2 million, for a combined value so far this season of $330.69 million.
Interest in futures seems to be bouncing back, with 21 trades last week and 15 this week. Crossbreds have garnered some of that attention this week. For 19 Micron wool, five trades dealt. One trade was agreed at 1,650¢ for November. Four trades were dealt for April 2020 and agreed between 1,600¢ to 1,670¢. For 21 Micron wool, six trades dealt, one for September at 1,650¢ and three for November with agreements between 1,520¢ and 1,535¢.
One trade was dealt for both January and April 2020 at 1,600¢ and 1,630¢ respectively. Four trades dealt on 28 micron wool, two for both November and December agreeing between 835¢ and 850¢. It’s good to see confidence returning in the forward market. That this has come when the auction market seems to have hit its base and indeed is bouncing back seems of little coincidence.
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With China waiving some tariffs on US goods and the US postponing implementation of their tariff increase, both nations appear to be testing the waters ahead of face to face negotiations in October. These are positive signs for all in the wool supply chain.
This week has restored some confidence in sellers and as a result next weeks roster has increased to 31,107 bales. All three selling centres have sales on Wednesday and Thursday. The following weeks have also seen an increase in rostered offerings of 28,510 and 33,980.
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