WEEKLY MARKET REPORT

Week Ending 13^th September, 2013

AWEX Northern Micron Indices Comparison

SURPRISE, SURPRISE, IT FELL!

There were no surprises on Wednesday when we started selling that the wool market was going to be cheaper - question was by how much? Some were saying a collective 50 cheaper by the end of next week; others were saying no more than 20 cheaper this week. So it looks like we received the full fall this week and it was a good 50 cents clean across all merino categories. Thankfully for us we were first seller on Wednesday and, whilst it was evident that the market was cheaper on some lots, it didn’t seem like it was across the board as some clips sold fully unchanged on last week.

The room 2 wools were well sought after and low vm pieces and bellies were chased by the Chinese topmakers and cardings again the standouts with Reward (China), Michell and Victoria Wool Processors banging heads.

If it sounds like we’re not that sad about a 50 cent fall well the reality is that the market is a full dollar dearer than it was two weeks ago even after this week’s fall, and it just rose too quickly and too much to think it wouldn’t have a reaction.

We are hearing that most of the damage was done this week and the dollar easing late in the week certainly helped.

One reason for bringing on the inevitable fall was a jump in the offering of 10,000 bales against the predicted offering a week prior. This again was quite obvious that when a market displays all the signs of a shortage that supply increases when it can.

The Nanjing Wool Conference begins tomorrow and our man on the ground there is this report’s normal scribe, none other than Luke Fitzgerald. This three day conference has become the centre of attention with buyers who supply wool to China and is a very good commercial forum for brokers, buyers and processors to come together and share information. For the past two days Luke and Christine have been part of the Techwool technical team visiting topmakers, carbonisers and even a spinning mill. Luke reports that Chinese processors are very bullish about the long term and business is being done this week at these levels. He commented that the open top sector for knitwear is particularly strong. Open tops are short tops around 50mm which are made from prem wools, crutchings and locks for the knitwear sector to be spun on circular knitting machines.

This explains the two year rise of the carding indicator which has climbed almost non stop by over 300 cents. It is now worthwhile to pick crutchings, particularly if they are 50-60mm in length. Good locks and crutching now regularly making over $1000 a bale.

Next week our intrepid reporter will no doubt have more information about the wool conference and may even share with us how the Aussie beer drinking team fares in the boat races, of which Luke has found himself a member. The Chinese take this quite seriously and tension will be high as the Aussies lost to the Chinese last year after easily winning only to be disqualified due to spillage!

Next week back here for us it’s business as usual with 50,000 bales on offer in three centres - our tip steady to firm.

Fwd. Price Trades W/E 13 September, 2013

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

1095 cents ê 33 cents compared with 05/09/2013                 0.9252 é 0.0151 compared with 05/09/2013

Northern Market Indicators (AUD cents/kg clean)

1118 cents ê 31 cents compared with 05/09/2013