WEEKLY MARKET REPORT

Week Ending 20^th June, 2014

AWEX Northern Micron Indices Comparison

MARKET CLOSE TO THE BOTTOM … WE THINK

The wool market lurched from bad to, dare we say, worse as the wool trade was presented with the smallest national catalogue in two years - just 23,500 bales as Fremantle sat out the week. An upward shift in the exchange rate (94 cents) and demand remaining subdued looked to be the main factors in the market peeling off by another 8 cents to 1021, dangerously close to the psychological figure of 1000 cents.

Looking far and wide for some good news is taking a lot of time and, unfortunately, finding nothing that gives us any confidence that a change of fortunes for the market is in the winds. The market did commence with very little change as most indicators were just in buyers’ favour except 16.5s and 20s giving up 10 cents. Thursday saw the losses more wide-spread as 18.5 to 20 micron and 17s gave up another 10 cents. By week’s end most indicators had fallen 10 to 20 cents, with the exception of 22s (up by 2) and 17.5 (only losing 4 cents). Again, the inferior types bore the biggest falls as good spec lots made up to 20 cents higher than the indicators. We even had a few lots from Cobar with 3 to 4% of VM making as good a price as FNF lots. This is in stark contrast to two identical lots from Louth with strength readings of 42 and 34 nkt, both with high mid-breaks, having a price difference of over 50 cents. A quick look at the table above shows that 22 microns are now dearer than 19-21s, something that even buyers can’t explain.

Skirtings suffered the same fate as their fleece counterparts. The lower VM lots took the biggest hit across all micron categories as >5% lost 5 to 10 cents but we still have many lots of “BKN” making over 500 cents.  It was remiss of me not to mention a line of BLS from last week’s sale. These BLS from Binalong measured 17.7-3.1-55.7 with a bit of colour and soft cott made 685 cents, 1230 cents clean, and an amazing 44 cents higher than the indicator. It beat all fleece prices (on a clean basis) except 1 line of LMS wool from the same grower, an outstanding effort. The MCI lost 11 cents to slip under 800 cents as an opening day surrender of 10 to 15 cents for locks and crutchings was followed by a solid finish to the sale. With such a small catalogue the crossbred sector was the second smallest of the season (15%) with most prices unchanged, bar 30 micron, up by 10 cents.

Next week’s sale will create history for Macdonald & Co as we will offer our biggest catalogue to date next Thursday - 2284 bales. We will also have the largest catalogue in Sydney, 21% of the entire Sydney offering! A great achievement. On to the market - prospects for the market to finally reach the bottom may be getting closer. Our contact in the buying trade thought lots with good specs might hold their ground or be a touch dearer and the inferior types to keep fading. The market may have flattened out but business is still hard to book up. Here’s hoping he’s on the money!

Ag Concepts Fwd Prices at 20 June 2014

Main Buyers (This Week)

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

1021 cents ê 8 cents compared with 13/06/2014                                   0.9405 é 0.0025 compared with 13/06/2014

Northern Market Indicators (AUD cents/kg clean)

1035 cents ê 11 cents compared with 13/06/2014