WEEKLY MARKET REPORT

Week Ending 20^th September, 2013

 AWEX Northern Micron Indices Comparison

PRODIGAL SON RETURNS HOME EMPTY HANDED!

Like the Aussie cricket team the Australian delegation headed home from the Nanjing Wool Conference almost empty handed with a lower market and a thorough thrashing in the post conference beer drinking competition. Our trusty delegate, Luke, played a major part in the defeated team and was full of admiration for the winning team, as was all of the Aussie’s hopeful of selling them a bale or two!

On a more serious note Luke reports a fairly upbeat tone at the conference despite this week’s market retreating another 23 cents.

Some of the key points of interest (which he will no doubt elaborate on in detail next week) were the demand for woven knitwear ongoing (despite the first real fall for these types in almost two years this week) - the casual dress down style at present favours this market as opposed to the worsted sector; the cautious optimism from processors for the market in general for the next 12-18 months; the critical shortage of 21-23 micron wool being a concern; and general agreement that an improvement in EU and US economies will help the fine wool market - and the signs are there.

On the negative side of the equation, the rising cost of labour in China is seen as a looming issue with something like a 400% increase in labour costs predicted between 2010 and 2015. This of course equates to a burgeoning middle class with higher disposable income which should be good for wool. The world wide “affluent ageing” (55-65 year olds with more money to spend) will also be a big hit in China.

At home we weren’t helped by some bad economic news in the US which flawed their currency and, like a cork, our dollar bobbed up 2 cents. Whilst our buyers were doing business in China and mostly upbeat, the slightly higher offerings of the last two weeks and the lingering reaction to the large rises of a fortnight ago still weighed heavily throughout the week to see nearly all merino categories fall 20-30 cents. Our sale which was last on Thursday was showing signs that it was leveling out, and this was further demonstrated in Western Australia closing two hours later on a stronger note. Despite this growers were resisting giving all the previous gains back and nationally 11.3% was passed in. Much of this wool will find its way onto Wooltrade and wait for the next surge. A few weeks back it was a very helpful tool for taking advantage of market conditions providing it is managed correctly.

Next week Sydney sells over three days as we host a designated Superfine sale replacing one of the former Newcastle sales. Macwool will be first up on Tuesday with a cracking fine wool clip from the Yass area to test the Italians resolve.

We look forward to hearing about Luke’s excuses on a beaten team and maybe some more substance about our future in China for wool.

Fwd. Price Trades W/E 20 September, 2013

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

1072 cents ê 23 cents compared with 13/09/2013                  0.9493 é 0.0241 compared with 13/09/2013

Northern Market Indicators (AUD cents/kg clean)

1094 cents ê 24 cents compared with 13/09/2013