WEEKLY MARKET REPORT

Week Ending 14^th June, 2013

AWEX Northern Micron Indices Comparison

 STILL RISING BUT …

The market continued on its merry way as Fremantle came back on line to see a national catalogue of 31,000 bales offered - the smallest three centre offering in 2 years and the second smallest for the season. Wednesday saw all three centres record good rises, especially in the west as they played catch-up to the two Eastern seaboard centres. All fleece types in Fremantle climbed 30 to 55 cents while Melbourne’s gains were a bit more subdued - the majority up by 10 to 15 cents as the indicators in Sydney rose a consistent 15 to 25 cents. Thursday saw the market settle as subtle rises of most indicators on the East Coast was put into perspective in Fremantle as losses of 5 to 15 cents were recorded across all fleece categories. This slight correction casting a doubt over next week’s price direction, even with only 25,000 bales on offer as Fremantle stays on the sidelines again next week.

The closeness of the market cannot be more evident this week as the gap between 18 and 22 micron in Sydney is just 69 cents (1247 to 1178). The gap in Melbourne is even closer, as the 22 and 23 micron indicators are at 1198 and 1196, incredibly higher than the 19.5 to 21 indicators in both centres. With 18s at 1239, a 41 cent gap out to 22 microns is all that exists between the 4 microns in Melbourne (good for medium wool growers) but this just emphasises the lacklustre demand in the superfine sector, something that may not be solved at the IWTO conference wrapping up in Italy today.

Room 2 wools kept pace with the fleece offering as all sectors recorded healthy gains. There seemed to be a cut off point with skirtings at the 5% VM level as types under this vm level benefitted from a 30 cent rise with the burrier lots posting a 10 cent lift. Crossbreds made good gains as the finer indicators (26 to 28s) added 20 cents while the broader lots looked up to 10 cents better. Cardings again shone brightly as both MCIs on the East coast are trading above 800 cents, fast approaching the record levels of mid 2011. All descriptions of locks and stains climbed 30 to 35 cents while crutchings added 20 cents.

Our delegate at the IWTO conference in Biella at the foothills of the Italian Alps has been busy reporting back to HQ here in Dubbo via text, email and photos which are up on our Facebook page. One definite thing to come out of the conference is the uneasy relationship between the Italians and the Chinese. The Italians have publicly called on China to “stop the race to the bottom where price is the winner over quality”. The boss of G Schneider, Claudio Lacchio spoke on the importance of wool not being treated like mass produced fibres like cotton, polyester or synthetics, but like other niche fibres such as cashmere and silk and processed and marketed accordingly. Wool now only makes up 1.5% of the apparel market, well and truly making it a niche fibre. The currency shift has benefitted the Europeans more than China or the US, but business is still being done at these levels, particularly cardings, which could break price records in the next few weeks. Quantity, or lack of it, is a big talking point. Our delegate sat next to Mr Wen, the boss of Tianyu (now the largest combing mill in the world) at last night’s formal dinner, more on that dinner conversation next week!

The six week rise that has yielded 104 cents may be at its end for the moment. The softer market in Fremantle late yesterday might be a precursor for the price direction next week despite the small offering. The friendlier exchange rate and national catalogue averaging 35,000 bales a sale since Easter has helped drive the market up to these levels. Fingers crossed!

Ag Concepts Fwd. Price Trades W/E 14 June, 2013

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

1070 cents é 18 cents compared with 07/06/2013                                 0.9462 é 0.0004 compared with 07/06/2013

Northern Market Indicators (AUD cents/kg clean)

1086 cents é 24 cents compared with 07/06/2013