WEEKLY MARKET REPORT

Week Ending 13^th March, 2015

AWEX Northern Micron Indices Comparison

MARKET REGAINS SOME LOST GROUND

The four week run of cheaper wool sales was broken this week as the 3 selling centres reversed the downward trend to post subtle gains of 3 to 7 cents in their local indicators. The AWEX EMI added 7 cents to its value, now 1092, but more importantly for the Chinese, the weakening A$ saw the market peel off by 20 in US terms, now down to just 829 cents.

The price movements were similar on both days to see 17.5 to 20 microns up by 10 to 15 cents while finer than 17 and broader than 21 were in sellers’ favour to 5 cents higher. The selection on offer is typical of a late-summer/early-autumn pattern as best style low VM types decrease in volume as VM and colour are on the rise. Despite this trend the low spec types were well supported and price gaps between the two narrowed somewhat. Helping this is a sharp decrease in high mid-break types with their discounts becoming less of a factor as is tender wool and high mid-breaks. A drought-ravaged clip from Goodooga yielding 65%, FNF with an average strength of 28 nkt and mid-break of 64 was only discounted 13 cents from sound types. A great result despite the tough conditions these sheep have endured now stretching for 3 years.

Room 2 kept bubbling along as skirtings had a solid sale as the best style low VM types came under renewed buyer pressure to gain up to 20 cents and more on selected lots. Crossbreds shook off the stalled pattern of the past few sales as rises of 5 to 15 cents were commonplace. 30 micron and broader hit new highs as 28s are closing in on 13 year old records and 25s are just 10 cents from 1000 cents clean. One crossbred grower averaged 544 cents/kg, $984/bale (gross) for 29 micron prem fleece and XB lambs fleece - great prices!! Cardings have just come off their historical highs as locks and stains finished in buyers’ favour, the MCI back by 1 cent to 909. All Room 2 types are still enjoying great buyer support as over 97% was sold to the trade.

A sharp drop in the exchange rate could be the impetus for a dearer market. The A$ is trading below 76US cents and, at one stage, was at a 6 year low - a fall of 2.25 cents this week. Good jobs growth in the US and the widely anticipated interest rate rise there sent the $US higher and all other currencies into a tailspin. Economic conditions around the globe are vastly different. The EU looks to be taking the lead from the US and starting to print mountains of money to try and dig themselves out of stalling growth. The lack of good economic growth is one thing not on China’s radar. The Aust. Financial Review reports that by 2020 (only 5 years away) China will have 350 million people - more than the entire population of the USA - classed as upper-middle class. These people can afford imported food (protein via red meat), overseas holidays, flash cars and wear brand name woolen garments, hopefully creating more demand.

Our source, who is in China at the moment, reports red hot demand for short wools, cardings, XBs and skirtings and a bit of re-newed interest for merino fleece types as the A$ finds a new lower level. We sell first next Wednesday with 1150 bales on offer, market should be solid to dearer.

Ag Concepts Fwd Prices at 31 January

Main Buyers (This Week)