WEEKLY MARKET REPORT

Week Ending 2^nd March, 2012

Northern Micron Indices Comparison: Source of information: AWEX

NEWCASTLE SURVIVES, BUT ONLY JUST

The fears we held for Newcastle appeared to be on track as the market opened softer on Tuesday. Even with the fall of the EMI of 7 cents, brokers selling on the opening day were prepared for the fall as they looked to adjust their valuations correctly as only 6% was passed in.  Movements were minimal as fine microns under 18.5 suffered 10 cent losses while 19s and broader fell 10 to 20 cents with a lack of quantity leading to limited orders the reason for this fall. The superior selection on Wednesday brought buyers out of the wood- work as the increased competition saw an increase of 20 to 35 cents for 17.5 and finer and 10 to 15 cent rises for indicators out to 20 microns. Oddly enough the pass in rate was almost 14%! Melbourne and Fremantle enjoyed good rises with most indicators adding 20 to 30 cents. Newcastle’s final day selling for the season saw a little “style adjustment’ with 17 and 17.5s back 13 cents and 18 and broader up to 10 cents better. In what might be a good lead into next week, Melbourne saw gains of 10 to 20 cents across the board. By week’s end rises were small - up to 5 cents for 19 and coarser and 10 to 15 for 18.5 and finer. Despite these modest rises, the AWEX Northern Indicator fell by 1 cent, an odd movement with all indicators in the positive. Best top-making style and better fleece lots may not be included in the make-up of indicator directions!

Skirtings had an up and down week literally as a solid opening led to a cheaper close as the selection waned towards the end of the sale. Tuesday saw a solid start and, as with the fleece room, Wednesday’s superior offering led to keener competition, pushing low VM lots, under 4%, 10 to 20 cents higher. The less than attractive last day’s selection saw the market taper by 10 to 30 cents. Cardings followed the same pattern as the two other sectors of the merino offering. Locks opened 10 cents or better as crutchings and stains remained solid until the final day as heavier carbonising types of locks lost 10 to 15 cents. The small amount of Crossbreds fell 10 to 15 cents in the 28 to 30 micron range with all other types unchanged under some-what subdued bidding.

This week’s sale brings to an end Newcastle’s selling as a stand alone centre for this season. Over the four sales conducted there since mid September, none have had the Northern Region Indicator lift in value. The last two sales (including this week) saw 1 cent falls with the September and October sales losing 19 and 10 cents respectively. These bad results add fuel to the fire for those in the industry gunning for Newcastle to cease as a selling centre. No such luck yet as next season Newcastle is scheduled to have 5 sales, 4 prior to Christmas and the February sale in the corresponding week next year.  As the above table illustrates, sub 19 micron are lower than this time a year ago, with 18s and finer a massive margin behind. This is reflected in prices as the top price in Newcastle was 2,690 cents for a 14.0 micron weaner lot. Next week will see a catalogue of  16,000 bales in Sydney with Macwool offering 1060 bales first up on Wednesday.         

MAJOR AUCTION BUYERS (Bales)

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

                Eastern 1213 cents é 6cents compared with 23/02/12                         1.0743 é 0.0101 compared with 23/02/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1246 cents ê 1cent compared with 23/02/12