WEEKLY MARKET REPORT

Week Ending 14^th October, 2011

Northern Micron Indices Comparison: Source of information: AWEX

FLAT, BUT UNSTEADY

A static market as the AWEX EMI posted a modest 4 cent drop to 1160 cents. Once again (as has been the case for over a month) finer indicators weighed heavily on the direction of the market. Types finer than 18.5 micron suffered falls on both days to record 10 to 30 cent losses down to 17.5. Finer than this were just in buyers’ favour, slipping up to 5 cents. The fortunes of these super-fine types may well be determined next week as Newcastle hosts its second sale of the season and buyers are fearing that again there may well be too much of the same type on offer as was the case at the last Newcastle sale. Without the support of Italian buyers, these types continue to fall with 17.5 and finer slumping 400 to 470 cents and 18 to 19 microns off by 150 to 280 cents since the last Newcastle sale (mid September). This week’s fall was the fifth weekly drop in a row adding up to a 134 cent (10.4%) fall - the biggest five week drop in three years. There is no guarantee that the Italians will start buying next week which could see another tumble in this sector if left up to the Chinese to prop the market up. But with no real competition on these types, they have been in free-fall and are still to find a level. Medium lots held up okay with 19 to 23 micron moving up or down by single figures only. Initially, these indicators made double digit gains only to see 19, 22 and 23 micron lose ground by week’s end due to the upward shift in the exchange rate to 102 US cents from 96 cents earlier in the week. The AUD$ has all but regained its lost ground after hitting a low of 93.88 cents two weeks ago. Whether a rising exchange rate will affect the market in the coming weeks is anyone’s guess. Burry types didn’t seem to suffer as some of our 2 and 3 % VM lots were making just as much as the FNF types, with some types looking 30 cents dearer than the indicator.

Skirtings performed well all week and posted solid, if not spectacular, gains. The emphasis was on 19 and broader around the 5% VM mark which moved ahead 20 cents with other quoted as sellers’ favour. The “C” and’ D” fault types looked to be in more demand as Gedge re-entered the market and the “holes” in the market seemed to have gone for the time being. The carding indicator moved ahead by just the 1 cent as washing locks rose 5 to 10 cents, crutchings looked 5 dearer and stains lost 10 cents late on Thursday. Crossbreds lost ground due to the unfavourable exchange rate with the broader end up to 5 cents off, 28 micron 10 cents down and the biggest loser of the week, 26 micron, off by a massive 63 cents.

We wait now to see how the market performs not only in Newcastle but in the run till Christmas as buyers sort out their buying strategies and see what steps Europe takes to service the bad debts of several countries. The solutions in Europe will go a long way to determining which way the market will go but the “ pipe-line” is empty and the supply of wool entering the market will not increase as some expect it to. We have no catalogue next week in Newcastle but will be offering 750 bales on Thursday 27^th October in Sale 17. As my fearful predictions of grand final winners came true 2 weeks ago I’ll try again as it’s a big weekend for sport. The Wallabies and the Kangaroos of course and Precedence for Bart Cummings in the Caulfield Cup. Good Luck!

Agrisk FDIC Indicative Quotes 14/10/2011

MAJOR AUCTION BUYERS (Bales)

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

                Eastern 1160 cents (ê 4) compared with 07/10/11                       1.0203 é 0.0562 compared with 07/10/11

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1201 cents (é 3) compared with 07/10/11