WEEKLY MARKET REPORT

Week Ending 13^th July, 2012

Northern Micron Indices Comparison: Source of information: AWEX

A DISAPPOINTING END

A tough sale this week as the market retreated on both selling days in all three centres. Fremantle was back on line this week as a total of 48,000 bales were to be auctioned - the largest national catalogue in 12 weeks. Buyers became spooked at the big offering and cries of “too much wool” etc was all the talk on the show-floor early in the week. There was no talk of the three week recess pushing buyers to look for wool or buying enough stock to see them through this mid-year break. A look back at the Sale 1 and 2 national offerings last year saw 98,000 bales on offer. These past two sales saw 80,000 bales for sale, so how could this be ‘too much wool” or “not orderly marketing” or any other excuse that is trotted out when the national weekly catalogue approaches 50,000 bales? The only sector of the market to remain relatively unscathed was the super-fine microns of 17 and lower, finishing up to 10 cents better. 17.5 to 18.5 and 21 and 22 micron indicators gave up 20 to 30 cents with 19 to 20 getting caned by 40 to 55 cents. Discounts for faults, (tender/colour/cott) expanded again as did the differential for lots with 2% VM when compared to FNF types - the  margin around the 30 to 40 cent clean range, regardless of micron or style. A large portion of our fleece lots, 66%, were between 19 and 21 micron and made 1150 to 1200 cents clean. Only a 10 cent gap now exists between 19.5 and 23 micron-1199 to1189- the closest in 9 years with 18.5 microns at 1275 cents, just 86 cents better than 23s.

Skirtings softened as the sale progressed, but not to the extent of the fleece room. Better specified lots in the finer micron ranges with under 5% VM  opened the week unchanged and held their values to the final lots sold with lower style types containing 8% VM or higher finished off the pace by around 20 to 25 cents. Cardings added 2 cents to the MCI to sit at 610 cents on the back of crutchings and stains remaining solid and locks tending sellers’ favour. Crossbreds also recorded little movement with both days quoted as unchanged as the 30 micron indicator was increased by 2 cents. One indicator movement of note was the 26 micron in Melbourne enjoying a 14 cent lift.

A disappointing end to sales as most traders will have a hard time booking up wool over this 3 week recess on the back of a falling market. There will no doubt be a build-up of quantity over this period and a wait-and-see approach by most buyers will be the most likely outcome when sales resume on Tuesday, 7^th August. National weekly quantities last August averaged 46,000 bales, this figure a bit above what is anticipated this year. The EMI finished at 1062 cents, 299 cents behind the level of a year ago (22%). Hopefully buyers can see the bigger picture of a reduced volume of wool coming onto the market over the long-term rather than bigger quantities in the short term when sales resume in three weeks. Our next report will be on 10^th August; this may be the start of a rough ride for the market through the spring.          

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

                Eastern 1062 cents ê 15 cents compared with 05/07/12                       1.0188 ê 0.0073 compared with 05/07/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1069 cents ê 20 cents compared with 05/07/12