The 21,787 bales offered across the northern and southern centres had expectations to perform better after last week’s 54c recovery, conversely business into China became hard to execute once again highlighting the issues surrounding the US- China trade tariffs.
The Pass-in rate shot back up to 15% as both sellers and buyers struggle to determine fair value for the wool offering.
Merino Fleece took a 15-45c hit this week as the poor quality and unfavourable specified lots took the biggest hit. Best style and ‘measured’ lots experienced little or no pain this week.
Skirtings were cheaper across the board with losses of 20-30c whilst the Crossbreds held their grounds relatively well on a limited offering. Cardings were variable with Sydney’s MC washing off 15c whilst Melbourne lost 54c.
Forward Price Report from Michael Avery (Southern Aurora Wool):
The rollercoaster continued for the spot auction as dwindling demand and diminishing consumer confidence saw the market give back the majority of last week’s gains.
Modest volumes went through the forward markets with the majority of the action being trade focused. Exporters and processors were balancing their positions as growers tended to stay on the fence. The forward discounts have increased marginally with the market seeing spring supply outstripping demand.
Trading levels still remained in the upper quartile (75%) of prices for the last four years. 21.0 microns traded down to 2080 for September and 2050 for October and November. Bidding fell away towards the end of the week with closing spring levels dipping below 2000.
We expect continued volatility in the spot market with tight supply until the new season. Short term rallies may provide some opportunities for growers to hedge.
We expect some activity in the September to December window around the 2040 level for 19.0 micron and 2000 for 21.0 micron.
The risk profile remains high. Global confidence continues to wane. While direct tariffs are yet to be placed on apparel goods the current trade war is impacting negatively on Chinese processors. Any easing of these tensions will help stabilise the forward market.
This week the market will return to 3 selling centres with a total of just under 30,000 bales on offer. In my view everyone is second guessing what the price of wool will be next however as we saw last week you cannot tell until the hammer starts to fall.
I believe the lower quantities present a huge trading risk for exporters to sell forward therefore they refrain from doing business to avoid the price squeeze and the market losses its momentum. Hence I’m sitting on the fence for next week’s EMI result.
-Marty Moses, Moses and Son