Mecardo Analysis - Calm after the storm

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

Last Thursday while Melbourne & Fremantle continued to lift, Sydney didn't sell, so this week the market between centres firstly had to realign. This saw Melbourne down and Sydney up on Wednesday, however when the dust had settled at the close of the week there was a feeling of relief that the market overall was positive following a couple of tumultuous weeks. Despite much speculation before the market opened that this week would see much of last weeks gains returned, the result was strong with a steady demand from buyers at the current market levels.

The Eastern Market Indicator (EMI) lifted 7 cents or 12% for the week, to finish at 1,542 cents. The Aus$ fell slightly to US $0.679. This saw the EMI in US$ fall by 9 cents to end the week at 1,047 cents.

Western Australia again had a positive result. The Western Market Indicator rose by 18 cents to close at 1,643 cents .

Again, it was the finer types that performed strongest, reflected across the three selling centres. Crossbreds were generally unchanged, however the Merino Cardings Indicators in Sydney and Fremantle lifted, with the 1,000-cent mark again in sight.

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30,135 bales were offered to sale with 10.4% passed in. This saw 27,007 bales cleared to the trade (Figure 2). There have been 102,227 fewer bales sold this season compared to the same period last year. This is an average weekly gap of 11,359 bales.

The dollar value for the week was $47.09 million, for a combined value so far this season of $377.78 million.

Futures contracts have been chugging along with eleven trades this week. We saw one trade for 18 Micron wool, agreeing at 1,800¢ for March 2020. For 19 Micron wool, five trades dealt. One trade was agreed at 1,755¢ for October and for November, one trade agreed at 1,720¢. Two trades were dealt for December, agreeing between 1,710¢ and 1,720¢. For 21 Micron wool, four trades dealt, one for October at 1,620¢. One trade was dealt for January, May and June 2020 and these agreed at 1,630¢, 1,580¢ and 1,600¢ respectively. One trade was dealt on 28 micron wool, agreeing at 900¢ for October. Confidence continues to be evident in the forward market, even while the auction market volatility is still on the mind. Prices and interest could change in a heartbeat as the future really is uncertain.

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The week ahead

Next week just under 30,000 bales are rostered, with the roster only increasing marginally in subsequent weeks.

Although the volatile market is still playing on all participants minds, there is somewhat a feeling of restored confidence. With the much reduced supply compared to previous years, the market should at least hold these levels, although the recent big swings will no doubt cause the market to remain on edge.

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