WEEKLY MARKET REPORT

Week Ending 12^th August, 2011

Northern Micron Indices Comparison: Source of information: AWEX

OFF TO A BAD START

Wool sales resumed this week after the annual three week winter recess with a reduction in prices across the board. With economic uncertainty gripping the Northern Hemisphere, an 11 % move in the exchange rate within a week and the second largest offering since January, the market was always going to be put under pressure. From the opening lot on Tuesday losses were widespread with all indicators shedding 50 to 65 cents, except 22s and 23s, dropping 35 to 45 cents. Types with heavier burr, colour and cott recorded losses of up to 100 cents, but by the close of trade increases were being found in some microns. This slightly better tone continued on through to Wednesday when we sold with most indicators posting a 5 to 10 cent gain. Luck was on our side as, by Thursday, the tone had slipped and the market retreated by another 10 to 40 cents across the board. By week’s end 17 and finer fell by 120 cents and more with 17.5 to 22 micron giving up 65 to 90 cents and 23 and 24s dropping 45 cents.

Skirtings followed a similar pattern to the fleece room as medium types lost 30 cents with the finer pieces and bellies giving up 60 to 80 cents. The firm to dearer tone that we experienced on the Wednesday couldn’t be sustained on Thursday as an increase in 6% vm and higher early in the day was negated as all descriptions closed 10 to 20 cents lower. As was the case with the other sectors of the merino market, cardings also took a hit. The 50 to 80 cent fall on the opening day for all types was negated slightly on Wednesday as gains of 10 cents were recorded. Any momentum from the previous day was well and truly gone by Thursday as falls of 10 to 20 cents were the order of the day. The currency sensitive crossbred sector bucked the falling trend to post 5 to 20 cent gains. After 15 to 20 cent falls on Tuesday the market recovered to give this week’s market some good news.

A disappointing start to this series of sales as the 59 cent fall in the EMI was the largest weekly fall in 10 months.19% of the offering was passed in, the highest pass in rate since April 2010. Deepening concerns over economic stability in Europe and the USA teetering on the brink of bankruptcy coupled with their downgrading to AA+ of their credit rating, has made for an uncertain and nervous few weeks for global stock markets as the reality of another recession looms large. The inability of some countries to repay mountainous amounts of debt to the World Bank has the ability to rattle consumer confidence in our most important wool consuming markets. If the drop in demand comes, this has the potential to hurt the wool market and force prices down. The supply situation will not change dramatically as reports of poor lambings are common-place, thus keeping pressure on the ability to increase numbers any time soon. National offerings drop to 47,800 next week with Don Macdonald cataloguing 1500 bales late on Thursday. Fingers crossed that the market can stay somewhere at these levels.

AgRisk FDIC Indicative Quotes 12/08/11scriptions

MAJOR AUCTION BUYERS (Bales)

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

                Eastern 1302 cents (ê59) compared with 13/07/11                                                1.0274 ê 0.0357 compared with 13/07/11

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1349 cents (ê61) compared with 13/07/11