Independent wool brokers extend payment terms

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Rowan Woods, president of the NCWSBA.

INDEPENDENT Australian Wool Brokers have increased payment terms and free storage periods to help exporters cope with the industry’s difficult logistical and financial environment.

However, Australia’s biggest brokers – Elders, Nutrien and AWN – have yet to release details of likely concessions as the auction market this week rebounded with stronger competition after a significant drop of 3.39 cents. the Australian dollar exchange rate.

Sheep Central reported last week that shipping delays and cost increases around the world, COVID lockdowns in China, a bale unloading bottleneck as well as documentation and funding issues are combining to limit the purchasing activity of exporters.

Exporters still under pressure – Woods

National Council of Wool Selling Brokers of Australia chairman and Jemalong Wool chief executive Rowan Woods said despite the improving market he still believed exporters were under pressure.

“We cannot remove wool from stores.

“We’re overflowing with yarn in our yarn shops because buyers leave it in there and that creates problems for us because we have to find more storage.”

Mr Woods said it was encouraging that some brokers were able to offer more favorable payment and storage terms to exporters.

“We understand that not everyone will be able to do this, but anyone who can, I’m sure that’s greatly appreciated by the trade.”

Mr Woods said the industry’s biggest enemy right now is big deals.

“There is not much we can do about the shipping problem, it’s a longer term solution.

“The only thing we have any sort of control over is the amount of wool we put up for sale, but we can’t interfere with natural market forces.”

Mr Woods said the warning signals are starting to appear from cash-strapped exporters and traders who cannot refinance until the wool is shipped.

“They are really starting to suffer and the signals are that it could get worse before it gets better and exporters will just have to abstain from the market as they won’t have the funding to be able to buy.

“It will have an impact on the price, make no mistake about it.”

Mr Woods said extending delivery times was an individual decision of brokers.

“But anyone who listens to the export trade and has empathy for it will seriously consider these options.

“Without these exporters, we have no market, so we need to keep as many of these exporters in business and buying as possible,” he said.

Independent brokers make quick and storage changes

After members of the Inland Wool Brokers Association met with Australian Wool Exporters and Processors Council Josh Lamb earlier this week, IWBA President Mark Bazeley said brokers would make individual decisions on the whether to extend delivery and storage periods this season and then reassess the situation.

He said the current problem has developed over the past two years.

“Cash has been an issue for some time.”

“The consensus was that as individuals we will do our best to help them (the exporters) because it is in our interest.

“It’s not a short-term thing, it’s a scenario that’s going to last for a while,” he said.

“The fact that Shanghai is on lockdown has really made it extremely difficult and there’s not a lot of joy coming from the shipping companies.”

Last Friday, the allied wool brokerage firms, Macdonald & Co and Carmichael & Co, decided from this week to extend payment terms by one week and double the free storage period to two weeks, to be reassessed by the end of the week. Director Don Macdonald said the move was well received by producers.

On Tuesday, Tasmanian brokers Alistair and Rob Calvert said from this week their company Wool Solutions would extend the payment deadline by a week, requiring payment by the Friday fortnight following the selling week.

“Storage fees will remain the same and will begin to be charged on the Friday following the sale week, as is currently the case.”

On Wednesday, Gordon Litchfield informed exporters that the company would extend the prompt payment period by seven days from sale 45 and that the free storage period would also be adjusted by seven days.

This week, IWBA members – Moses and Son, Gordon Litchfield and Riverina Wool – followed the example of Jemalong Wool, which had an extended payment prompt of 14 days for years and also before Easter extended its 21-day free storage period.

On Wednesday, Moses and Son chief executive Marty Moses said the brokerage would extend quick sale terms from week 45 by seven days until further notice, and that the company would consume increases in transport costs and would maintain its after-sales costs until the end of the current sale. season.

“Moses & Son management acknowledges the current serious situation with irregular ocean freight schedules and the bottleneck in containerization facilities following numerous discussions with exporter managers and staff,” Mr. Moses.

Mr Moses said the recent increase in fuel prices had led transport providers to apply freight taxes of up to 20% and that many brokers had acquired or built additional storage facilities to cope with the the increase in wool held in pre-sale and buyers’ stock after the sale.

“Unfortunately, it seems almost certain that the current situation we are all facing will be with us for at least the next 6-12 months,” he said.

Yesterday Mr Bazeley, as principal owner of Riverina Wool, informed ACWEP that from the M44 sale next week until the end of the season break (in July), the company brokerage would extend its prompt payment period by one week.

“This is in light of the current shipping and financing issues that currently exist for exporters,” Mr Bazeley said.

“Once the new season begins, Riverina Wool will review this extension of the speed requirement.”

Hodge Wool, another New South Wales broker, has also informed ACWEP that from next week until the end of the season the company will extend its prompt payment period by another week. extra and will review it at the start of the new season.

The North Geelong broker, Ackroyd and Dadswell, has also today announced that it will extend its prompt payment deadlines by one week from the next M44 sale until the end of the season break, date at which it will be reviewed.

Elders are monitoring the situation

Elders National Wool Selling Center director Simon Hogan said the company is monitoring the situation closely.

“We have had internal discussions on the matter and we are working closely and communicating with a number of exporters.

“A percentage of our payments are made ahead of time,” he said.

Mr Hogan said the elders had no control over the storage of customers’ wool after it was sold.

“Once the wool is sold, they become customers of AWH.”

Mr Hogan said Elders wanted maximum support for wool from its growers.

“So we certainly take this issue very seriously and want to act in the best interests of our growers.”

No decision on rapid changes to AWN

AWN chief executive John Colley said at this stage the company had not decided to extend delivery times for exporters.

He said payment prompts were an issue requiring individual action by each broker dealing with their own terms and conditions with the trade.

“It’s not something the industry can collectively look at, they won’t look at and talk about it.

“But we have to be careful not to just kick the box and create a bottleneck in the wool, which is one of our main concerns,” he said.

“It’s a free market and it works quite well; the reality is that the market has not collapsed and producers must have the right to sell their wool.

“Each company will make its own decision about what happens; we believe in a free market and by extending the prompt, if everyone does the same thing, it just pushes the box further – it doesn’t actually solve the problem,” he said.

Mr Colley said the businesses have mostly moved from the wool-buying trade and were mostly small, family-run businesses that lack the ability to access finance from the old trading houses.

“Maybe it’s their own internal problem as much as anything.”

He acknowledged the shipping issues, but said “we also have a business to run and we have to pay our bills.”

Broker Support Welcomed – ACWEP

Chairman of the Australian Wool Exporters and Processors Council, Josh Lamb, said the response from independent brokers in extending payment terms and free storage periods has been overwhelming and greatly appreciated.

He said the rise in the AWEX Eastern Market benchmark indicator by 10 cents to 1377c/clean kg should be seen in the context of the falling exchange rate. He thought the market should have been even more expensive “indicating that there is something unhealthy going on in the background”.

“ACWEP and NCWSBA have been discussing these issues for several months, with input from inside brokers and a few other groups, and we have been successful in getting some changes.”

Nutrien has not yet responded to requests for comment on the situation.

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