WEEKLY MARKET REPORT

Week Ending 11^th July, 2014

AWEX Northern Micron Indices Comparison

ZEGNA TO THE RESCUE

The new selling season continued on a positive note this week as prices improved across the board. This sale was the last chance for buyers to secure wool before the annual 3 week winter recess. This week’s pattern was a mirror image of the previous sale as the best increases came in the 17 to 19 micron range, gaining 15 to 20 cents. The benchmark AWEX EMI rose by 8 cents to 1026 with the market in US terms up by 10 cents to 965 - a good result as the A$ hung around 94 cents all week. We looked as though we caught the best of the market as a solid opening day was followed by more spirited bidding on Thursday to see our catalogue clear 98% to the trade. Apart from the microns mentioned above, medium types were a bit more subdued moving ahead by up to 5 cents. It was pleasing to see the lower spec types move ahead as well as the better lots which again sold up to 30 cents higher than their indicators. Our catalogue again (for the 4^th sale in a row) was one of the better ones in Sydney according to the buyers which was reflected in some of the prices paid for the lots with everything going for them.

The skirting market that had been in somewhat of a holding pattern for a few sales fired up this week as buyers chased all types to push them 20 to 25 cents higher with emphasis on lots up to 8% VM, with some long types (>90mm) another 20 cents better. Cardings had a solid sale as both eastern seaboard centres posted small gains with Melbourne now 800 cents and Sydney at 796 - great levels for these types. Crossbreds were the most subdued sectors as prices moved a few cents either side of unchanged. This didn’t seem to bother growers as just 20 bales (1.1%) were passed in.

Plenty happening in the wool industry as reported in this week’s “The Land”. Italian luxury fashion label, “Zegna” has bought a majority share in the New England property “Achill”. The 6,300 acre property east of Armidale was previously owned by the Coventry family and was bought to promote super-fine wool as a rare, special and sustainable fibre. Zegna will now be involved in every step of the supply chain, from farm to the consumer.

Still in Italy, football superstar Alessandro Del Piero, who had 2 seasons with Sydney FC, will be AWI’s front-man for its latest “Merino Wool. No Finer Feeling” campaign. His squeaky clean image and popularity with a wide age group of fans was seen as a key weapon to attract more consumers to buy a big range of Merino clothing from high-end fashions to casual and high-tech sportswear.

As this writer reported last September, after his trip to China, because of the ever-expanding knitwear sector and the trend to “casualisation” that comes primarily from shorter stapled wools of which demand is growing, more and more mills are looking to buy shorter types (The Land pages 12-13). Worsted suiting is becoming less popular now only requiring 15% of global wool-top output as European imports of worsted wool has fallen 25% in just 3 years. Wool sales recommence on 5^th August with about 50,000 bales on offer.

Main Buyers (This Week)

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

1026 cents é 8 cents compared with 4/07/2014                                     0.9401 é 0.0020 compared with 4/07/2014

Northern Market Indicators (AUD cents/kg clean)

1035 cents é 8 cents compared with 4/07/2014