WEEKLY MARKET REPORT

Week Ending 19^th October, 2012

Northern Micron Indices Comparison: Source of information: AWEX

IS THIS UP, UP AND AWAY?

The concerns of a “style adjustment” coming off a cracking Newcastle selection were quickly put to bed as Melbourne opened this week’s sale on Tuesday. Not that the market raced away, but all the talk was for a substantially dearer market. All three regional indicators did what most people expected as gains of up to 52 cents was the result on Wednesday as all three centres came on line. The market steadied on Thursday as buyers took stock of the two previous days, but were prepared to push the finer types up to 30 cents better. The EMI broke through the 1000 cent barrier to sit at 1014, a rise of 39 cents - the biggest weekly rise since February and now at a level not seen since Sale 2. The last eight selling days (Sale 14, 15 and this week) has seen the longest run of rises in 16 months - 77 cents over this period. The biggest gains were in the 18 to 20 micron range jumping 55 to 70 cents. As mentioned, the superfine types resisted the style adjustment and rose between 15 and 40 cents. The medium indicators weren’t neglected either as 21 to 24 micron posted gains of 45 to 30 cents, this resulting in a pass in rate of just 1.7% as discounts for colour, tender and VM shrunk to low levels, although 2%VM types were adjusted down 10 to 20 cents on Thursday.

Skirtings kept their upward momentum going as all types (regardless of VM, style or micron) recorded rises of 20 to 35 cents, with just the odd lot carrying heavy cott and jowl barely maintained. Cardings also built on their recovery as the MCI broke through the 600 cent barrier for the first time since Sale 2 to sit at 617 cents. Locks added 15 to 20 cents while stains and crutchings were quoted up 35 to 45 cents from the Newcastle sale. Crossbred wool made up over 18% of this week’s selection and buyers welcomed the larger offering with open arms after the skinny pickings in Newcastle. All indicators bounced with 26s matching the merino fleece indicators with a 45 cent jump; 28s rose 25 cents; with the two broader indicators 30 and 32 up by around 15 cents.

How things have changed in the space of six weeks. The mood was all doom and gloom up till sale 11 when the market lifted, with no real talk of any significant recovery till after Christmas. The market did stagger in sales 12 and 13, but since then it’s been onwards and upwards with everyone suddenly looking for wool and keen to buy. Economic conditions certainly haven’t changed significantly in Europe, although signs of a recovery are starting to appear. The US is now in somewhat of a “holding pattern’ with the outcome of the Presidential Election in five weeks taking centre stage. The three AWI meetings held in Dubbo, Nyngan and Louth over the past few days were a success as an average of 25 growers attended each meeting. The outlining of future marketing and R and D programs look to be on track to ramp up awareness and consumption, especially in China. Don’t forget that voting for Woolpoll 2012 closes on 2nd November. If you are eligible to vote, AWI are recommending the levy stay at 2% which has been the status quo for over 10 years. Next week sees 40,000 bales on offer nationally; we sell first on Thursday with 1,000 bales on offer and a solid to dearer market most likely.

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

                Eastern 1014 cents é 39 cents compared with 11/10/12                                1.0396 é 0.0121 compared with 11/10/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1033 cents é 38 cents compared with 11/10/12