Market Review 270609
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by Scorpion Stinger
As deputy MOI, I'm doing a lot of looking into the health of our markets, so I have a few insights to share. As a firm believer in a free market, I feel it's best to provide current and potential GM's with more information so that they can make informed choices.
I intend to release a weekly update on market health, which won't be light reading but may be useful to some. This one is focused on Grain/Food and Iron/Weapons, but each week will be a variation and we'll cover everything once or more per month.
Overview - Australia in general suffer from lack of population and too many people wanting to be company bosses. So unless we get continual population growth, company profits will often be under pressure.
1 Grain
Total market stock reduced over the week by 2000 units as companies shed staff or closed down. This led to a stabilised price level - The market has bottomed
The bulk of the market volume and price leading comes from the Q2 and Q3 companies. The competition consistently revolves around 4 companies
The lowest unit price available was steady at 33 cents during the week with the weighted average cost (WAC) also steady at around 45 cents
2 Food
With wargames on, food should generally be focused on Q1, but it still seems to have demand at all levels
Q1 Prices have bottomed at 68 - 69 cents per unit. All companies in Q1 food are unprofitable at these levels. Total market stock increased by 300 over the week
There was a marked increase in stock held off market, but that doesn't change the fundamentals of oversupply. 2 companies were sold and 1 moved up to Q2. Most others shed staff. (3 sacked all staff)
Q2 A slight increase in supply coming from some staff hiring and one new entrant has led to an equivalent drop in pricing. Total market stock up by 100 units and lowest price down from 2.29 to 2.10
Q3 Steady market supply but a lot of profitability has gone from the market due to a mini price war in a thin market. Lowest price trended down over the week from 4.00 to 3.36
Q4 One could be forgiven for thinking a cartel operates in Q4 food with all prices at 7.35 and market stock limited. However supply is building so the gloves will be off soon.
Q5 This is an international market and we rely on 2 local companies for reasonable prices. Much higher barriers to entry but at 10 AUD per unit they are both very profitable. Better than the OS companies
5 Iron
Australia is in a poor position internationally with iron having only medium regions to choose from. Total Market stk rose to 2900 units plus 5000 units held in the weapons companies.
Many more local producers uncovered this week so trends still unreliable, but clearly, if exposed to zero tariff our locals would be out of business.
Most of the competition comes from internationals who pick and choose where they sell, but there was a drop in unit price from around 99 cents to 88 during the week
6 Weapons
Not enough data yet to make a sound statement on this market overall but like gifting it is totally distorted by government producing to cover it's own needs for defence
Q1 Lowest market pricing was steady at 6.12 despite a reduction in TMS from 950 to 680 units over the week. Most companies have their own Iron supply arrangements in place.
Q2 TMS increased from 200 to 490 units and lowest avail price fell from 15.75 to 12.65. At these levels our weapons are within 10% of international best which is very good given no High iron regions
Q3 Only 2 companies competing with TMS rising slightly from 70 to 80 but price offers falling from 25.90 to 19.90. A very good week for Q3 weapons buyers
Q4 No offers in the market
Q5 only 1 local and one international offering. Demand and supply both too thin to make any comment
Next week - Diamonds/Gifting, Oil and Housing
There's a lot of data behind these comments. I could easily be wrong but the reliability will get better. If you'd like access to more information, or can provide better info, please PM me. If you'd like to get involved and take on market monitoring in a segment, message me about that too.
Thanks
Scorpion Stinger
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Comments
Voted. Good stuff, thanks.
nice start scorpion, as you say it will get better as you get further into the numbers
Useful article well done !
Nice!
I look forward to your Diamond/Gift report as I am "involved" in that sector *cough*Q4 Diamonds*cough* 😉
I need diamond report (Q1).
Very insitfull article
Q4 food has already reached it's limits with keeping it's set price
with prices starting to fall expect to get cheaper Q4 food
Useful info. Thanks mate. Voted and subscribed.
Ok since you have no information on the weapons market I'll give it to you. The weapons market is saturated and is about to break due to domestic products outstripping demand, not only this but overseas companies in countries with cheap currency, cheap wages and regions of high iron are undercutting all of the domestic companies. Not only has the previous congress failed to recognise this but one senator thought it would be a great idea to increase weapons VAT.
The import tax needs to be raised!!!! Figure that out and fast or risk destroying the industry. Most companies are selling for breaking even or less trying to compete with companies that produce the item for 1/4 of the gold value, and god help the ones that are buying iron off the market, because they're screwed.
How do I know this? I own a weapons company and I also work for a weapons company, and I did the proper research and actually looked at the companies selling in the Australian market, surprise surprise the ones charging less than it costs us to make them were foreign.
Congress wake up and do something useful instead of doing joke proposals or having a sook at each other because he or she said this or he or she called me that. Grow up and do your job, we elected you to work for the good of our nation, not so you could get 5g and then sit on your asses. Next time your elected think, what should I be doing to help my nation, not yay I'm elected time to sit on my ass.
[malaysia Ambassador] very informative well written
My personal view is a tweak in tariffs, reducing Iron and increasing Weapons. Having said that, I can give you the sourcing of every weapons co, and there's only one buying local.
All the rest have arrangements in place to get Iron from cheap high Q sources. So OK, it's a lot of extra work but it should put weapons in the same category as food where it gets back to wage levels (which govt can't control).
Wage levels and our small population base combine to make profits hard for all companies. In weapons you combine the fact that the biggest potential customers are provided with govt produced weapons and you see why the weapons market is so thin.
I agree we need to review and change things
Cheeseball, I own a weapons company also, recently Nova stopped making weapons and the price has risen back to $7 mark for q1, the companies should be making a decent profit if your source of iron is good. Alas buying local iron is not profitable, unless you
i) own the company and
ii) are prepared to give yourself a low wage
Yeah Q1 has risen back up to more reasonable prices but if the companies that went bankrupt or have been withholding stock put it on the market, it will drive it back again. Not to mention if more foreign companies take advantage of our market.
Either way, we produce enough to feed Australia weapons, so raise the import taxes and do it fast.