WEEKLY MARKET REPORT

Week Ending 19^th August, 2011

Northern Micron Indices Comparison: Source of information: AWEX

BAD START CONTINUES

Hopes of a stable market were gone as early as Tuesday as all the talk was cheaper. Despite shrinking quantities over the next three weeks to a national weekly average of 42,000 bales and a relatively steady exchange rate, the market took another hit (albeit not as big as the previous week). The opening day saw losses of 30 to 40 cents for 18 micron and finer and the 20 micron indicator. All other indicators lost 10 to 20 cents bar 19s which posted a modest 2 cent gain. Thursday saw losses mainly in the finer types and broader end. 18.5 and finer again suffered from a lack of demand, shedding 40 to 60 cents. 19 to 21 micron were in buyers’ favour with 22 and 23s averaging a 15 cent fall. The 39 cent fall that the AWEX EMI suffered this week followed on from last week’s 59 cent drop to see the indicator on 1263 cents - its lowest point for 6 months. The 2 week fall of 98 cents is the biggest fortnightly fall in almost three years. Buyers are reporting difficult trading conditions for types under 18.5 micron, with virtually nothing sold regardless of vm. The falls of 60 to 90 cents in these categories this week is an indication of this lackluster sector of the market. The middle micron lots may be closing in a level of stability as falls of up to 15 cents (20s lost 44 cents) were met with some relief! 22s and broader lost 35 to 40 cents - a sign that these reached unsustainable levels before the July recess.

Skirtings suffered the same fate as the fleece room with opening day losses 20 to 30 cents with emphasis on the finer end of the offering. Buyer support was keener early on the final day but did wane towards the end of the day to leave all descriptions in buyers’ favour. Cardings continued their fall from grace as locks fell 40 to 50 cents with crutchings and stains giving up 30 to 40 cents. Cardings in the West seem to be doing a lot better as their MCI is 772 with the Northern MCI now down to 702 cents (a drop of nearly 100 cents since sale 01). Crossbreds couldn’t add to last week’s gains and slipped 5 to 10 in the 28 to 30 micron range with 26s losing 35 cents.

Uncertainty is still gripping not only the wool market, but global financial markets. The threat of a Northern Hemisphere recession is more likely than not. The big overnight losses in the US to see the Dow Jones slip to under 11,000 is a blow to any confidence that may have existed. This, coupled with ongoing debt troubles in Europe, have economists and, more importantly, consumers around the world nervous about their spending habits. If people stop spending demand will certainly fall away and, with it, wool prices. Mills are cautious about their buying patterns and nothing will change in the immediate future given the economic conditions faced by many countries north of the Equator. Lack of supply is in our favour with no real movement either way soon. Next week’s national offering is under 40,000 with Don Macdonald& Co first up on Tuesday.    

AgRisk FDIC Indicative Quotes 19/08/11

MAJOR AUCTION BUYERS (Bales)

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

 Eastern 1263 cents (ê39) compared with 11/08/11                                               1.0491 é 0.0217 compared with 11/08/11

 Northern Market Indicators (AUD cents/kg clean)

 Northern 1312 cents (ê37) compared with 11/08/11