WEEKLY MARKET REPORT

Week Ending 2^nd December, 2011

Northern Micron Indices Comparison: Source of information: AWEX

A VOLATILE WEEK

The good start to the week came to an abrupt halt as most of the opening days rises were negated by a savage fall on Thursday to have just a 1 cent rise in the EMI to 1193 by the end of the week. Show-floor talk of a good rise was spot on as the market opened dearer on Wednesday with the emphasis on 19 micron and broader which posted a 15 to 45 cent rise. The finer microns were quoted from 8 cents up to 6 cheaper, with a few “straight types” looking 15 to 20 cents better than the previous week’s quotes. The exchange rate then looked to play its part on Thursday. After falling to under 97 US cents late last week and steadily rising to a tick under parity on Wednesday, the sudden overnight spike to 103 cents sent the market into a tail-spin on Thursday with the 19 micron and finer taking the biggest hits with falls of 30 to 45 cents. The middle micron losses weren’t as severe recording losses of 10 to 15 cents. With the currency jumping, this equated to a 62 cent rise in US cent terms to 1223 cents (5.2%). The week to week rise in the exchange of 5.12 cents was the biggest factor in the volatile movement in the market with co-ordinated action by European Central banks to help restore liquidity to global financial systems the main reason for strengthening currencies on Wednesday night. By the final lot on Thursday, 18.5 and finer lost 20 to 45 cents, 20 and broader 20 to 30 cents better and 19s back 10 with 19.5 in sellers’ favour.

Skirtings mirrored the fleece room as all types and descriptions added 10 to 20 cents from the opening bell on Wednesday with most emphasis on lots 5% VM and higher. Buyers gave up these good advancements on the final day with losses of 20 cents for most categories but 20 micron and coarser least affected. Cardings looked to be the worst performing sector of the sale as Thursday’s big loss contributed to the MCI dropping 38 cents (7.5%) to 698 cents. Locks collapsed to the tune of 50 to 60 cents while stains and crutchings tracked 20 to 25 cents down. The big volumes of Crossbreds continue to be offered on the eastern seaboard with Sydney cataloguing their largest weekly selection in three years (25%). Despite the volume and currency shifts, crossbred types basically held their ground with an average 5 cent fall.

Some buyers also seemed to be spooked by the size of next week’s national offering of 52,000 bales - the largest since mid September. This spike in quantity is due to Melbourne’s jump in volume to 31,000 bales next week from an average of 23,000 over the last five weeks - a ridiculous 37% increase - orderly marketing at its worst! Year on year figures show a fall of 25,000 less than last year and the November 2011 figures worse - 39,000 bales less than last November. We sell last on Thursday next week with hope of a market recovery not that confident amongst the buying trade.                                                                

                                                                   Agrisk FDIC Indicative Quotes 2/12/2011

MAJOR AUCTION BUYERS (Bales)

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

                Eastern 1193 cents (é1) compared with 25/11/11                                 1.0257 é 0.0512 compared with 25/11/11

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1232 cents (é1) compared with 18/11/11