WEEKLY MARKET REPORT

Week Ending 17^th June, 2016

AWEX Northern Micron Indices Comparison

THE WORLD WAITS ON BRITAIN’S VOTE

 After last sale’s reality check with the high exchange rate some traders thought (and hoped!!) there was still some downward movement for the market especially if the A$ remained above 74 cents. Thankfully this was not the case as the market staged a modest recovery of 9 cents for the EMI to 1279, regaining 30% of last week’s losses as the $ spent all week in the mid to high 73 cent range. In US$ terms the shift was minute, down 3 cents to 946. Recent history shows the better style, low VM types that are diminishing in volume are keenly sought after and this sale was no difference again but their less fancied lower style, high VM lots closed the price gap on the superior types. 19 to 23 micron indicators rose by 10 to 20 cents while 18.5 and finer averaged a 5 cent rise with some cracking finer types up to 50 cents higher. Growers warmed to the consolidation of prices on the east coast as over 95% of the fleece selection was cleared to the trade.

Skirtings followed a similar pattern as most descriptions looked 10 to 15 cents dearer. Again, as was the case with the fleece room, low VM types were in high demand, some adding 30 to 80 cents as the odd burry lots were irregular. Cardings couldn’t regain any of last sale’s losses as the MCI fell by 3 cents to 1084. Falls were small as locks and stains closed 5 to 10 cents down while crutchings were firm. This sector of the market is still very good. We had 1 client’s STN make more on a clean basis than their BKN with similar VM (15 to 16%) and another lot of STN (8% VM) - just 30 cents (clean) behind that grower’s WNR PCS with 11% VM. Crossbreds had a mixed sale with 26s up by 30 cents in Melbourne to 1100 cents. Medium indicators were in sellers’ favour back by up to 5 cents with the broader microns >32 slipping by 10 cents.

A much more sedate week as exchange rates held reasonably stable letting exporters trade with a bit more confidence. Quantities are still small with this week’s volume of 31,600 bales the smallest 3 centre offering since August last year. From the end of May to the final sale in June national weekly volumes will only average high 20,000s - certainly a concern for buyers trying to shore up a bit of quantity before the 3 week winter recess starting in mid July. Another concern on the radar is Britain’s vote next Thursday on their continued membership in the EU. The outcome will certainly move exchange rates and have a massive bearing on global economic sentiment.

Futures are keeping pace with the physical market and at one point this week were marginally ahead before the sale commenced. Lock-in prices out to mid September are on par with the indicators to about 30/50 cent discount - still very good prices to hedge for the short term. This strategy should be considered as a solid form of insurance against a price correction. Next sale sees the 2 East Coast centres in action with 24,000 bales on offer - the smallest sale in 12 months. Futures are forecasting a solid sale.

Ag Concepts Fwd Prices at 17 June 2016

Main Buyers (This Week)