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Friday, May 10, 2019

Export volumes down but value up

By Robert Herrmann & Matthew McAdam  |  Source: NCWSBA, AWEX, Mecardo

2019-05-10 Wool 1

2019-05-10 Wool 2

2019-05-10 Wool 3

2019-05-10 Wool 4

The wool market tracked lower for Merino types this past week however crossbreds bucked the trend and continued to rally. As for exports, Chris Wilcox, NCWSBA, reports that export volume is down 12% for the season to March, however as a reflection of the strong market export value is up by 3%.

Chinese activity was even more effected, with season to date exports down 17% and export value down by 1%. This could be viewed as a concern; our major customer taking less wool, or it could be viewed as a positive; other markets stepping in to spread the demand.

The Eastern Market Indicator (EMI) eased by 8 cents on the week to close at 1,952 cents. The Au$ fell by almost 0.5 cents to US $0.697 and as a result, the EMI in US$ terms fell by 15 cents to end the week at 1,361 US cents (Table 1).

The Western Market Indicator (WMI) after gaining 28 cents last week, gave up 31 cents to 2,062 cents this week.

It was a much reduced offering of 32,801 bales that came forward this week. Growers passed in 12.9% of the offering passed in. The break up was 9% in Sydney, 12.9% in Melbourne while Fremantle sellers passed 18.1% of bales offered.

This meant 28,576 bales were cleared to the trade, almost 12,000 fewer than last week. In the auction weeks since the winter recess, 1,263,967 bales have been cleared to the trade, 230,624 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year now sits at 6,406 bales per week fewer.

The dollar value for the week was $58.3 million ($82.9 million last week) for a combined value of $2.907 billion so far this season. A simple calculation of $ value divided by bales sold gives us $2,039 per bale across all types for the week.

The only positive moves were for the Crossbreds, gaining another 10/15 cents but mainly confined to the 28 micron and finer. While Cardings in Melbourne & Sydney were largely unchanged, however Fremantle fell 25 cents.

A busy week on the forwards market, the first in quite a while, with 14 trades agreed. The lions share of the market has leant heavily into medium fibers, where 9 trades for 19 micron were agreed, most looking far into the future. In the fine fibers, one trade was agreed for 18 micron in June for 2,340¢.

For 19 micron wool, one trade was dealt for July at 2,245¢. For 2020, two trades were agreed for July at 2,150¢, one for October at 2,155¢ and one for November at 2,125¢. For 2021, one trade was dealt for January, March, April and June, all agreeing at 2,155¢, a true testament to the flat forward curve.  In 21 micron, one trade was dealt for June at 2,250¢. In course fibers, one trade was dealt for 28 micron in June, agreeing at 1,250¢ and one for February 2021 at 935. One trade was dealt for 30 micron in August for 900¢.

The week ahead

The roster for the next few weeks is beginning to show the threatened decline in supply. Next week just 33,361 bales are rostered for sale with all centres selling on Wednesday and Thursday. The following weeks 30,719 & 33,360 bales are currently forecast.

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Mecardo information is provided to assist in your marketing decisions. It contains a range of data and views on the current market. It is not intended to constitute advice for a specific purpose. Before taking any action in relation to information contained within this report, you should seek advice from a qualified professional. The information is obtained from a variety of sources and neither Mecardo nor Ag Concepts Advisory will be held liable for any loss or damage whatsoever that may arise from the use of information or for any error or mis-statement contained in this report. 

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