WEEKLY MARKET REPORT

                           Week Ending 11^th May, 2012

        Northern Micron Indices Comparison: Source of information: AWEX

SMALL CATALOGUE, LOWER DOLLAR BUT MARKET STALLS

Momentum, or the very little we had, ground to a halt this week as the market was unable to sustain the slight rises of the past fortnight. Despite the smallest national catalogue of the season (33,000 offered with just 28,000 sold) and the AUD$ dropping to parity, the market drifted to have the EMI losing 15 cents to 1155. This was the smallest offering since the end of June last year with the May/June period last year averaging only 32,000 bales a week, with this year’s figures expected to be even lower for the corresponding period. All indicators were in the negative on the Eastern seaboard. Sydney recorded minimal losses with most under 10 cents, except 18 and 19 micron down 11 and 19 cents respectively. Melbourne’s losses were heavier - 20 to 30 cents for 18 and finer and 15 to 20 cent falls for 18.5 to 22s. Their broader types varied greatly - 23 and 24s lost 5 to 10 cents with 25 up 7 and 26 micron posting a massive 44 cent rise to 918 cents. A great price for this indicator. The lacklustre fine wool price is hard to ignore as the gap between 18.5 and 22 micron is only 120 cents. The large proportion of burry lots carrying some colour and cott are attracting bigger and bigger discounts as the FNF types held their ground. This week looked as though the discount for any VM started at 1% as the threshold over the past few sales was around 1.5 to 2% before any real discount was noticeable. Lots with low Nkts and high mid-breaks were also harshly punished.

Merino skirtings continued their downward trend as low VM types under 6% opened 10 to 20 cents lower in the 18 to 20 micron range. There was no real change to this pattern on the final selling day as some fine micron lots lost another 10 cents with lots carrying cott and colour again attracting bigger discounts than previous sales. Only the good to best style low VM lots looked a touch dearer by the end of the sale. Cardings again lost value with the MCI down by 12 cents. Locks remained the same as a last day rally of 10 cents negated the opening day’s fall of the same amount. Crutchings quotes were unchanged for the week, but it was the stains influencing the indicator fall as they couldn’t sustain their opening day’s solid quote as they ended the sale 30 to 40 cents down. It was the same pattern with the crossbreds as a smaller selection, just 17%, remained unchanged on the opening day only to run out of steam on Thursday dropping 10 cents.

A disappointing sale as the small catalogue and more favourable exchange rate couldn’t move the market in a positive direction. The political changes in Greece and France and more bad economic news out of Europe (several countries slipping back into recession) is weighing heavily on the market with most traders happy to take a “wait and see” approach at the moment even though stocks are low in China and the wool pipe-line is empty. Even selling one container of certain types is a battle at these levels. Hopefully some good news comes out of the IWTO conference held this week in New York. Next week is another historic week for Macwool as we offer our largest catalogue thus far, 419 lots totaling 2110 bales late on Thursday. Hopefully the market can sustain these levels.      

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

                Eastern 1155 cents ê 15 cents compared with 04/05/12                        1.0110 ê 0.0198 compared with 04/05/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1182 cents ê 13 cents compared with 04/05/12