Mecardo Analysis - Big offering but market solid
- By: "Farm Tender" News
- Ag Tech News
- Mar 01, 2019
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By Robert Herrmann | Source: AWEX, Mecardo.
After 8 weeks of consecutive rises in the wool market, producers responded with a large offering which resulted in a clearance to the trade of 44,800 bales. The opening sales in Melbourne followed the weak finish in Fremantle last week. However, by the close on Thursday, it was a positive sentiment, with all centres posting gains on Thursday.
The Eastern Market Indicator (EMI) eased over the week, falling 11 cents by the end of the week to 2,016 cents. The Au$ was again slightly weaker also. The EMI in US$ terms was lower, down 10 cents to end the week at 1,441 US cents (Table 1).
In Fremantle, the Western Market Indicator (WMI) had corrected late last week, so this week it lifted a further 16 cents to end the week at 2177 cents. This is now the highest level since September2018.
48,948 bales were offered for sale this week, with the trade clearing 44,846. This is 5,400 bales more than last week, a sign of confidence from buyers and a signal that growers are pleased with these levels. Only 8.4% or 4,102 bales passed in.
In the auction weeks since the winter recess, 943,537 bales have been cleared to the trade, 190,651 fewer than the same period last year. The average shortfall cleared to the trade compared to the same time last year now sits at 7,061 bales per week fewer.
The dollar value for the week was an impressive $99.27 million, for a combined value of $2.24 billion so far this season. A simple calculation of $ value divided by bales sold gives us $2,215 per bale across all types.
Crossbred types were mixed, 28 & 30 MPG were cheaper of last weeks record levels, while 26 & 32 MPG’s were up 10 – 20 cents.
Wool Forwards (by Matthew McAdam)
The forward market is still very strong, a reflection on the Foot and Mouth Disease in South Africa (SA) and China’s hesitance to engage. China accounts for more than 71% of SA’s regular wool exports, so overseas interest in our wool will likely continue more strongly until the disease is controlled and China relaxes their stance.
Twelve trades dealt in total over the week, the large majority of those in the medium fibre category.
In the fine wool category, three 19 Micron trades were agreed for December 2019, one at 2125¢ and two for 2150¢.
In the medium wool category, a significant seven trades were agreed, the lions’ share of these for May this year. Of these, four were dealt at 2250¢ and the remaining three for 2,280¢.
In coarse wools, one trade was dealt for 28 Micron in May at 1,010¢ and one for 30 Micron in June 2019 at 910¢.
The week ahead
According to the AWEX roster, the next week is another solid offering of 46,000 bales predicted, a big increase on last weeks estimate. The roster then drops sharply with 38 & 37,000 bales rostered for the next two weeks.
The tightening supply on the horizon should see the market activity remain robust, at least for the foreseeable future.
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