AUSTRALIAN WEEKLY MARKET REPORT

Comment

What a clear difference the one week can make. Buyer confidence returned and it didn’t take much to push the AWEX EMI nearly 3% dearer. Less than 30,000 bales were offered. Passed in rates were much lower as growers are more comfortable selling into a strong market. There was positive news regarding the sale of tops and greasy wool coming out of China late last week and the expectations of a dearer market came to fruition. It’s clear what difference just a little improvement in confidence can have when considering the volume and type of wool on offer. The Chinese focus was on 19.5 and broader plus the most inferior types. The overall price gap between best, worst, finest and broadest, is now at the smallest range for the season to date. As is often the case when the market is changing, the cardings move first, locks were as much as 8% dearer.

AWEX Eastern Indicator compared with 24/05/2019

Eastern Indicator

Close: 1887

Change in % +2.95%

If you want to learn more about AWEX indicators, visit the official website http://www.awex.com.au

Schneider Indicators compared with 24/05/2019

15 Micron

Close: 2,534

Change in %: -0.2%

↑16 Micron

Close: 2,349

Change in %: +0.51%

↑17 Micron

Close:  2,269

Change in %: +1.63%

↑18 Micron

Close: 2,174

Change in %: +0.51%

↑19 Micron

Close: 2,132

Change in %: +0.94%

 

Each indicator is expressed by a number representing a market quotation for a selected range of types and is not a price expression and it’s not influenced by currency fluctuations.

Wool indicators are anyway based on Australian Dollar.

If you want to learn more about SCHNEIDER indicators Click here.

Forecast

Growers are more likely to sell now. Historically an improvement in market confidence like this week would flush out volume for sale, but still just 23,000 bales are currently rostered for each of the next two weeks and less than 20,000 bales in week 51. No doubt, the first sale in July will be a larger one, the first of the new financial year, but we also have the three-week recess to consider in July. Anyone who needs wool either for prompt demand or to feed machinery will have little option but to buy. To wait would seem a risky proposition with the market volatility seen in recent times.

Auction offering – current week

Selling Centres for week 48

Market          Sale          Offered             Sold       Passed In

North                    S 48                      7864                          7459                  5.2%

South                   M 48                     16418                        14972                  8.8%

West                     F 48                      3991                           3470                  13.1%

 

Auction offering – next week

Market          Sale          Sale days          Volume

North                      S 49                        W-T                          10391

South                     M 49                       W-T                           13228

West                       F 49                      no sale

 

If you want to see the complete Wool Sales Roster click here.

EASTERN AUSTRALIAN MARKET REPORT

More positive tone continues.

COMMENT

Market up to 1% dearer.

FLEECE

All par to 1% dearer with the better specification and the most inferior lots most affected.

SKIRTINGS

1% dearer for all descriptions

OPEN TOP

Nominally very firm.

FUHRMANN NZ MARKET REPORT

Summary

Market eases slightly

Comment

South Island only selling today with 10,000 bales on offer.  The selection consisted of 40 percent average/inferior style fleeces 35.0 to 39.0 micron, 75/100mm and longer, 5 percent good style fleece 35.0 to 39.0 micron also 75/100mm and longer, 10 percent end of season lambs, 15% second shear, bulk 75mm. Also on offer were 20 percent associated oddments and 10 percent miscellaneous types.  China main with supported by Europe and Australasian carpet mills.

Fleece

Good colour crossbred fleece firm.

Poorer colour fleece buyers favour.

Second Shears

All descriptions buyers favour.

Lambs

First lambs fully firm.

Oddments

All descriptions generally 5% cheaper.

Passings

30% Passed In.

Next Auction

North Island only offering 6,500 bales on 6th June.

Fleece Summary

– Good colour
Variation %:  Firm

↓ Poorer style
Variation %:  Buyers favour

Second Shears Summary

↓ All descriptions
Variation %:  Buyers favour

Lambs

– End of season Lambs
Variation %: Fully Firm

Oddments

↓ All descriptions
Variation %: 5

EASTERN AUSTRALIAN MARKET REPORT

Following from the better tone last Thursday, all types and descriptions were dearer.

COMMENT

The upbeat ‘trade talk’ prior to the sale eventuated with more positive comment flowing from recent Chinese activity.

FLEECE

Few very best lots 19.0 micron and finer par to 1% dearer

Good to average specification 16.5 / 20.5 micron all 1 to 2% dearer

Inferior and tender types 17.0 / 20.5 micron were very keenly sought by Chinese interests and closed 3% dearer.

 

SKIRTINGS

1% dearer for all descriptions

OPEN TOP

Nominally 1% dearer.

AUSTRALIAN WEEKLY MARKET REPORT

Comment

Buyers are not confident to accumulate as downstream demand remains slow. Just 17,000 bales were sold to the trade but to place it into perspective, the weekly turnover was still M$32.7. Not bad considering the general gloomy outlook. We did notice much greater confidence return to the market yesterday. Bidding activity was stronger from a wider range of buyers. For the first time in several weeks, the more inferior types outperformed the better types in terms of market movement yesterday. The tender and lower yielding types were all 1% dearer with some perceived value at these levels entering the mindset of traders and topmakers. The AWEX merino carding indicator (MC) is now at the 19% percentile for 5 years. Meaning that prices have only been lower 18% of the time in 5 years. The market in this sector has certainly been affected but we remain confident that it will improve quickly. Supply of merino cardings will be more affected than most types when considering we will be at the lowest level of supply in 100 years within the next 12 months.

AWEX Eastern Indicator compared with 17/05/2019

Eastern Indicator

Close: 1833

Change in % -3.17%

If you want to learn more about AWEX indicators, visit the official website http://www.awex.com.au

Schneider Indicators compared with 17/05/2019

15 Micron

Close: 2,539

Change in %: 0%

16 Micron

Close: 2,337

Change in %: -2.44%

17 Micron

Close:  2,232

Change in %: -4.08%

18 Micron

Close: 2,163

Change in %: -3.28%

19 Micron

Close: 2,112

Change in %: -2.32%

 

Each indicator is expressed by a number representing a market quotation for a selected range of types and is not a price expression and it’s not influenced by currency fluctuations.

Wool indicators are anyway based on Australian Dollar.

If you want to learn more about SCHNEIDER indicators Click here.

Forecast

We keep focusing on supply, and for good reason. With 31,000 bales next week followed by as little as 20,000 nationally the week after we would expect the market to be performing better. It’s a difficult period, prices are easing and it’s obviously a moment to be cautious but some customers who are planning for the next season will start to make some enquiries at these reduced levels. It would provide some security to have something covered while others are reluctant to even consider it. Growers are still greatly suffering from the drought and have shown a very clear tendency to hold wool rather than to sell it in a falling market.

Auction offering – current week

Selling Centres for week 47

Market          Sale          Offered             Sold       Passed In

North                    S 47                      6900                          5066                  26.6%

South                   M 47                     12833                         9992                  22.1%

West                     F 47                      4388                           2250                  48.7%

 

Auction offering – next week

Market          Sale          Sale days          Volume

North                      S 48                        W-T                           8984

South                     M 48                       W-T                           17696

West                       F 48                        W                                4784

 

If you want to see the complete Wool Sales Roster click here.

Now available: Carbon Neutral Wool

Create your own Carbon Neutral Wool Products

As of May 2019, the Schneider Group is offering Carbon Neutral Wool Tops. These wool tops are made of Argentinian wool and are processed in our mill in Trelew. In addition to being carbon neutral, these wooltops can also be organic and RWS certified. Carbon Neutral Wool Tops offers our clients the possibility to develop their own carbon neutral yarns, fabrics and wool textile products.  

Knowing our impact

At the Schneider Group, our goal is to constantly improve our environmental impact and improve our own internal processes wherever possible. To achieve this goal, an important step was to measure our impact. In 2018, we undertook a Life Cycle Assessment (LCA) of our operation in Argentina where we have the unique setup of managing our own farms and running our own processing mill. The Life Cycle Assessment was conducted by the well-known wool LCA industry expert Stephen Wiedemann and his team from Integrity Ag & Environment. You can read all about our LCA study here.

Offsetting our impact

Once we fully understood our environmental impact in the areas of CO2 and methane emissions as well as water and energy use we were able to define projects on where and how to improve our farms as well as our mill. Some of these projects will take some time and investment over the next couple of years. In the meantime, however, we already wanted to be able to reduce our impact. Based on the LCA, we now knew exactly what our carbon emissions in our Fuhrmann Argentina operation were. This has led us to the idea to offset our carbon emissions by investing in a carbon-neutral project.

We have partnered up with Numerco, the industry leader in the field of carbon offset, and have invested in a carbon neutral project in Uruguay. With this investment, we can now offer our customers carbon neutral wool and help them achieve their own climate goals.

If you are interested in our climate neutral wool tops or want to work with us on our climate neutral wool project, then feel free to contact us any time.

EASTERN AUSTRALIAN MARKET REPORT

A much better market tone.

COMMENT

Inferior types were more keenly sought after and closed a little dearer.

FLEECE

Very best lots were tending harder to buy in a small offering.

Good to average lots from 17.5 / 21.5 micron fully firm.

Inferior lots, tender, low yielding fleece were par to 1% dearer.

 

SKIRTINGS

Very firm, tending dearer for better lots. Others unchanged.

OPEN TOP

Nominally unchanged but irregular.

FREMANTLE MARKET REPORT

COMMENT

Fleece 50-70 cents cheaper, skirtings 100 cents cheaper, open tops 25 cents cheaper.

FLEECE

Prices for fleece were around 50-70 cents cheaper today, with poor spec and fine wools the most affected. Grower resistance evident today with very high passed-in rate.
Fleece again had a very high passed-in rate of 53.9%.

SKIRTINGS

Skirtings again fell heavily and were generally 100 cents cheaper.

OPEN TOP

18.5u and finer open tops were 50-70 cents cheaper, while 18.5u and broader were 25 cents cheaper.

 

EASTERN AUSTRALIAN MARKET REPORT

Market uncertainty continues.

COMMENT

A large variation in price relative to the specification on offer. Yield, length and strength all major contributors to the sale result of individual lots.

FLEECE

It’s difficult to quote good weaving types due to a small selection.

Best lots nominally 1% easier from 17.0 / 21.5 micron.

All others 18.5 micron and finer 2 to 3% easier and 19.0 / 21.5 micron up to 2% easier.

 

SKIRTINGS

Good lots in limited supply up to 3% easier.

OPEN TOP

Nominally 2 to 3% easier.

Drought in Australia

Impacts of drought in Australia for the wool industry

At the Schneider Group, we believe that a close connection and regular exchange of ideas with wool producers is of mutual benefit to both sides of the wool business. In March 2019, a team of staff members from Europe and Australia traveled throughout Australia and New Zealand to meet with wool growers. As usual, we have learned a lot during this trip and wish to share some of the insights we have gained. In this blog post, we will talk about the dreadful drought castigating many Australian farms.

A severe drought in Australia for several seasons

Australia has been in the grip of a severe drought following the 2016/17 summer of record high temperatures and a record dry winter of 2017. The high temperatures and low rainfalls have led to severe drought across the eastern part of Australia, the exception being Tasmania.

Consequences on farm

As a consequence, wool growers had to adapt to the situation with several strategies in order to maintain a healthy flock and to continue operating their business. Many had a supply of supplementary feed ‘on hand’ as security for such events but the severity and longevity of this drought has proven very problematic. The financial strain of a long term supplementary feeding program has been crippling on many sheep and wool producers. The unfortunate consequence for the majority of growers was to reduce sheep numbers in their flock in order to care for their land assets and to maximize the health and productivity of their remaining flock.

We met with wool growers who have reduced sheep numbers by as much as 30% (total annual production in the state of NSW is down 20% year on year). Having to reduce sheep numbers has, of course, a long term effect on wool production and future income but still is a necessary step to take for the wellbeing of the animals.

The other step many growers had to undertake was feeding sheep with hay and grain, wherever paddocks were running too dry for grass and shrubs to grow. When we visited growers during our trip, we learned that many growers have been feeding their sheep for over 18 months. This necessity has of course also a huge financial impact for the grower’s business as prices for hay and grain have more than doubled. One grower explained that feeding one sheep for one week costs him around 3 AUS$, a cost that accumulates quickly over a long period of time as the drought continues. Water resources were also reportedly of concern but some welcome rain in recent weeks should help in this situation.

Consequences for wool

The drought not only has a huge impact on growers and their sheep but also affects the wool grown. The reduced nutrition for the sheep reduces the quality of the fibre they produce. The severe weather conditions impact the tenderness of the wool, making it more prone to break. Staple strength is an important qualitative characteristic of wool during the combing, spinning and weaving process. Meeting with wool growers across the country, gave us the opportunity to jointly discuss this challenge. One way to work with the increased tenderness is to start the shearing season earlier and therefore decrease the length of the fibre. This helps in managing the reduced staple strength during processing. Some growers also contemplated this to take advantage of the wool market to help finance the cost of feeding sheep. Others are shearing early before offloading excess stock as they head to another tough winter.

With very dry surfaces for the sheep to graze on, the wool also accumulates more dust within the fleece. For top makers, this is another challenge to manage during the scouring process. Processing costs relating to more regular cleaning of the water and the scour bowls add to the processing expense. As such topmakers generally have higher processing charges for lower yielding wools. The process of scouring is very important and the cleanliness of the wool tops for the spinner is also a major requirement.

Consequences for wool industry

With reduced sheep numbers, wool production has already decreased and is forecast to go down even further. For some micron ranges (20.0 / 23.0) the available kg of wool is down by 25% to 40% while there has been an increase in drought-affected fine wool to the end of April 2019. This has impacted on the market with finer micron prices falling while the medium and broader microns have been less affected. For more information on wool prices, see our weekly market reports.

With these low levels of supply, wool prices are expected to stay high. While high wool prices are difficult to hand down to the consumer markets, they are vital to keeping wool growers in business. The wool growers we talked to explained that all money received from wool sales gets directly reinvested into feed in order to keep the remaining sheep healthy and fit.

If you are interested to learn more about the Australian drought and its toll on the Australian wool industry, we recommend you watch the latest AWI video documenting the situation well.

The month of April and beginning of May have brought along some very welcomed rainfall. In the warmer and more arid regions, the rain allows grass to grow back. In colder areas of the country, temperatures are already too low for grass to grow. Sheep health conditions appear to be better compared to last year and wool growers remain committed to their sheep as they take good care for them through the winter. Of particular attention will be the ewes who will be expecting lambs in the spring – the future of the flock.