WEEKLY MARKET REPORT

Week Ending 16^thMay, 2014

AWEX Northern Micron Indices Comparison

EXTERNAL FACTORS AFFECT THE MARKET

Another bad week for the wool market as any hint of demand has dried up and the momentum that started before Easter has well and truly gone. The EMI peeled off by 26 cents, now down to 1020, dangerously close to the psychological figure of 1000. In US terms the fall was similar, back by 23 cents to 957 cents. The falls were across the board as most micron indicators gave up 40 odd cents bar 17s, down 24 cents, 19.5 losing 36 and 21s suffering the most down a whopping 55 cents. This sale’s fall was the largest in six weeks. All types came under heavy scrutiny from the buyers as they punished the off types as the discounts grew for colour, cott and VM over 1.5%. These types are growing in volume and are not helping the indicators. Despite the doom and gloom there were some reasonable results. A stylish, fine non-mulesed clip from Coolah saw a few lots making 10 to 60 cents better than their indicators. G SCHEINDER secured some of these for processing in Lithuania for a Norwegian manufacturer that specialises in outdoor sportswear, workwear and safety clothing for North Sea oil rig workers. Apart from these there were some tidy 20 micron lots from Carinda up to 50 cents higher than the indicator. Well done to both growers but unfortunately those results are few and far between.

Skirtings followed the fleece room as most types and descriptions fell by 10 to 20 cents with the finer microns carrying low levels of VM most affected. Cardings had a steady sale with locks being the only type to move - a reduction of 5 cents with stains and crutchings in sellers’ favour. Despite the slight fall this sector of the market is still at record levels as locks are making, in some cases, over 500 cents, not far behind some growers “BKN”. Crossbreds ended the sale with mixed results as the finer microns - 25/26 - lost 10 cents in Sydney with the same micron in Melbourne adding 15 cents to 782, a gap of 37 cents. The broader edge looked solid to sellers favour.

The sour taste that the market is leaving has people scratching their heads. From credit problems in China to the unrest in Ukraine, it would appear any issue to help cause uncertainty in the market is being trotted out. The government in China looks to be implementing tighter regulations on the banking sector in regards to lending criteria thus making it more difficult to give businesses finance, including woolen mills, thus limiting their purchasing power. The less money in the system leads to less competition and lower prices. Quantity or, more to the point, lack of is not the issue as just over 60,000 bales has been cleared to the trade in the past 2 weeks as 16% has been passed-in in this period -30% of fleece wool in Fremantle was not cleared to the trade this sale.

Next week will see a small national offering of 34,000 bales with just a one day sale in Fremantle and barely enough to sustain a 2 day sale in Sydney. We offer 1000 bales on Wednesday to hopefully a solid market, fingers well and truly crossed!!

Main Buyers (This Week)

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

1020 cents ê 26 cents compared with  9/05/2014                                  0.9380 é 0.0011 compared with 9/05/2014

Northern Market Indicators (AUD cents/kg clean)

1037 cents ê 26 cents compared with 9/05/2014