WEEKLY MARKET REPORT

Week Ending 10^th December, 2014

AWEX Northern Micron Indices Comparison

OFF TO A STEADY START

Wool sales re-commenced after the annual three week Christmas recess with a national catalogue of 57,000 bales. Santa did oblige on Christmas Day in a small way delivering some patchy rain mainly south and east of Dubbo. Virtually nothing fell to the north and west with some clients saying this drought is worse than 2002, 1994 or 1983 with little or no ground water left and no run-off for up to 2 years. An absolute desperate situation over a massive area as this week’s change again proved patchy at best. It seems now our best chance for a break could well be a flood as has been the case over the past few summers. Here’s hoping that same weather pattern takes shape.

Talk in some sectors of a substantial price hike in January looks to have flushed some “Sale 99” (wool on hold) onto the market in anticipation of this rise. This, however, did not eventuate as the EMI slid by 3 cents to 1131. All of Melbourne’s and most of the losses in Sydney were restricted to below 10 cents with 16.5, 17.5 and 19s cheaper by 10 to 15. Discounts for tender, colour, cott and high mid-break lots were as much as 30 cents. A closer examination of our fleece lots shows several making up to 25 cents higher than the indicator - some with colour and up to 2.5%VM. Fremantle took the brunt of the falls for the sale, all their indicators losing 20 to 35 cents with 22% of their catalogue passed in on Thursday - their largest pass-in rate for two months.

Skirtings had a reasonable sale as the opening day’s losses of 10 to 15 cents were negated by a firming market on Thursday to leave most types just 5 cents off the pace. Melbourne fared much worse as falls of 15 to 25 cents were the norm for most types and descriptions. Cardings bucked the falling trend of other sectors as solid gains of 15 to 20 cents saw the MCI on the Eastern Seaboard add 15 cents to their values - now both in the 820 cent range. Crossbreds saw biggest offering of this sector in 12 months but prices held on with only minor movements favouring buyers.

A somewhat cautious start to the year as a lower exchange rate (back by 1.5 cents from Sale 24 to 88.75 US cents) was cancelled out by bigger than expected volumes. Next sale’s 60,200 bale catalogue is the largest since the corresponding sale three years ago. It is highly likely that this figure will drop by a few thousand but it will be the 3^rd sale in a row that the national catalogue is well over 50,000 bales - 12 months since this happened. On the flip-side AWTA figures released show a slight drop in wool tested for the 6 months up until December 2013 when compared to the same period a year ago - about a 1.5% fall despite some growers moving shearing forward. This will be ringing alarm bells in China, as we move into autumn shearing and a reduction in volume. Spring ram sales have now concluded and despite 400 fewer rams sold the average was up by $60 to $1590 from 95 studs compared to last season. Sales now move to the New England and Southern Tablelands with the focus on Fine and Super-fine studs, no doubt under a bit of pressure from a lack-lustre wool market under 19 micron. Interesting to note the 93 studs selling XB rams averaged $1080 - back by $100 on last year. We offer 1100 bales early next Thursday, with the best outcome, hopefully not much change.

Ag Concepts Fwd Prices at 10 January

Main Buyers (This Week)

Eastern Market Indicators (AUD cents/kg clean)                  AUD/USD Currency Exchange

1131 cents ê  3 cents compared with 13/12/2013                0.8878 ê 0.0149 compared with 13/12/2013

Northern Market Indicators (AUD cents/kg clean)

1152 cents ê  1 cents compared with 13/12/2013