WEEKLY MARKET REPORT

Week Ending 2^nd May, 2014

AWEX Northern Micron Indices Comparison

OFF TO A STEADY START

Hostilities resumed this week after the annual Easter/Anzac Day recess last week. The market continued in the same vein as the fortnight leading into Easter, albeit more subdued.  The market made steady gains on the Eastern seaboard, an 8 cent rise to 1053, whereas Fremantle’s market was pushed 20 cents higher as its indicators recorded rises of 20 to 40 cents. In US terms the market actually lost 1 cent, to 982, due to the drop in the exchange rate. Most emphasis was on the medium to broader merino indicators as 20 to 23 micron lifted by 20 to 30 cents. 19 to 19.5s enjoyed a 10 to 15 cent rise as 18.5 and finer put on around 5 cents. All types and descriptions came under strong buyer pressure as Thursday’s consolidation followed Wednesday’s good start to these 9 weeks of sales till the end of the season. The largest national catalogue for 6 sales didn’t spook the trade as well over 95% of fleece was cleared in Sydney.

Skirtings enjoyed the continued good support from exporters as they concentrated more on the finer types. 18s and finer with < 3% VM  added  10 to 20 cents while all others were quoted solid to 10 cents better depending on micron style and VM. Cardings also enjoyed the renewed buyer interest as they shook off the subdued fortnight they had pre Easter to have the three centres post 10 cent gains for their regional indicators as the two Eastern centres approach the 800 cent mark with all types and descriptions rose by 10 to 15 cents. Most surprising was the subtle fall in the crossbred sector of around 5 cents as volumes start to dwindle.

A few statistics released this week would be ringing alarm bells in China. The year-on-year offerings have now opened up to 104,190 bales down - a fall of over 6%. Reinforcing this fall in volume is the monthly release of coring figures by AWTA.  April saw a massive drop of 20% for lots tested, no. of bales and weight when compared to April 2013 (public holidays playing a part in this fall). When compared to last season, July to April don’t look as bad but still a fall of just over 5%. The Australian Wool Production Forecasting Committee has revised down the shorn wool production to 340mkg (back by 3.4%) reflecting a drop in sheep shorn and lower fleece weights due to tough seasonal conditions and higher slaughter rates.

The sluggish price for fine and super-fine fleece types is again being hampered this season by an increase in volume of 18.5 and finer. This season to date has an increase of 14,300 bales finer than 18.5 and a decrease of 13,900 broader than 21, mainly due to drought conditions fining up the clip. This year’s average for adult fleece wool is 18.53, finer by half a micron when compared to the 2 previous season’s average of 19. Next week will see only 31,000 bales up for grabs the smallest sale since last August, the first of a string of rosters below 40,000 bales keeping the pressure on exporters.

Ag Concepts Fwd Prices at 2 May, 2014

Main Buyers (This Week)

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

1056 cents é  8 cents compared with 18/04/2014                                  0.9296 ê 0.0076 compared with 18/04/2014

Northern Market Indicators (AUD cents/kg clean)

1075 cents é  8 cents compared with 18/04/2014