WEEKLY MARKET REPORT

Week Ending 14^th March, 2014

 AWEX Northern Micron Indices Comparison

DON’T DESPAIR – IT’S BEEN WORSE!

The Australian wool market suffered heavier losses this week than what it had experienced over the past month. All three centres fell an average of 18 cents, with the AWEX EMI shedding 18 cents to 1054. This is the largest weekly loss in 4 sales and leaves the market at its lowest point in 6 months and a massive 90 cents behind the pre Christmas peak of 1145. The market had been in a 20 cent range, 1080 to 1060, for the past month but could not sustain this up and down movement as demand waned to a point where it is a case of when will demand lift and by how much. Most micron indicators, 17 to 23s, suffered losses of 20 to 35 cents with 16.5 back 10 cents. Some finer micron types, did achieve solid premiums on lots with a high nkt reading over 50 and low mid-breaks and best top-making and spinners styles. Pass-in rates soared to 30% for fleece types on Thursday sending a clear message to buyers that there is a fair amount of resistance to these levels.

Skirtings fared better as all types and styles were quoted as sellers’ favour. Cardings had a good sale with a market that ended the sale up to 5 cents better on all descriptions bar average bulk and colour locks. Crossbreds held their own in Sydney, but were 5 cents easier in the south due to another big offering - over 26% of the Melbourne catalogue.

Supply and demand are the key drivers for any commodity’s price fluctuations and wool is no different. Time and again we hear buyers squeal when quantities balloon above 50,000 bales and there is, according to them, some justification for the market to fall but when quantities are flat out to average 43,000 bales a week, over-supply isn’t an issue and won’t be for the foreseeable future. The lack of demand from China is stagnant at best, thus hurting the market at present especially at the finer end of the market. Medium types are getting close to low point with skirtings, cardings and crossbreds going great guns. 

One buyer reported a “fair amount of stock on hand” which, when cleared, will see more orders enter the market, while another buyer who booked up a few passed-in lots this morning thought the market may have bottomed out. Let’s hope he’s on the money. Production has decreased as AWTA figures reveal a 10% drop in volume for February when compared to that month in 2013. This must, at some stage, ring alarm bells in China. A growth target of over 7% in the Chinese economy does bode well for increased demand, sooner rather than later hopefully! This, coupled with the improving conditions in the USA and Europe, should be a positive outlook for increased consumption and better returns at the farm gate. A stable market would be a good outcome this week.

   Ag Concepts Fwd Prices at 14 March

Main Buyers (This Week)

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

1054 cents ê 18 cents compared with 7/03/2014                        0.9067 é 0.0056 compared with 7/03/2014                          

Northern Market Indicators (AUD cents/kg clean)

1071 cents ê 17 cents compared with 7/03/2014