WEEKLY MARKET REPORT

Week Ending 22^nd January, 2016

AWEX Northern Micron Indices Comparison

BIG VOLUMES, NO DRAMA!

Wool growers offering wool in this sale would’ve been holding their breath early in the week as the largest wool sale in 5 years commenced. This week’s 60,000 bale catalogue followed on from last sale’s 54,000 offering making it the biggest fortnight of wool sales since November, 2010. The A$ spent a few days below 69 cents, enough to convince exporters to step in and buy despite the big offering and a history of not being able to finance such a large catalogue. The market moved higher as the sale progressed with all indicators adding 10 to 20 cents to their values, bar 18.8s up by 30 cents. Most emphasis was on the low VM, high nkt lots as some high VM over-long types with high mid-breaks struggled to maintain levels achieved in the opening sale of the year.

Skirtings were more subdued in their movements as 18 micron and finer were quoted as 5 to 10 cents dearer for lots >4% VM with all other types fully firm for the week. Cardings continued to strengthen as this sector heads back to the record levels we saw in the winter. All types added 10 to 15 cents to their values with the 3 centres MCIs around the 1150 cent mark - astounding money for these types. Crossbreds reversed the losses of last week as medium types (26/28 micron) added 10 to 15 while other microns remained unchanged. The % of crossbred wool fell to 27% of the total offering on the eastern seaboard but eclipsed last sale by 300 bales. Despite popular opinion of peak offerings of crossbreds from October to November, the peak period is December to January. This could be due to an increase in crossbred lambs being shorn as Coles and Woolworths are reluctant to buy woolly lambs.

Despite the global turmoil of stock markets and the collapsing commodity market, the wool market seems to resist the severity of reactions in those areas. At $30US/barrel, (this equates to 12 cents US/litre) oil is fast approaching an unviable level. In $AU this equates to about $40/barrel or 16 cents/litre!! The OPEC countries’ reluctance to scale back oil production in the hope to squeeze other oil producing countries out could well be working but is damaging global economic growth, coupled with the hint of more interest rate rises in the US sending stock markets into a spin (downwards!!). Adding to stock market turmoil China’s growth did slow to 6.8% in the final quarter of 2015, its full year growth the lowest in 25 years. Quantities scale back to mid 40,000 over the next few sales but the $AU jump back to 70 cents may see buying urgency slow (as it did late on Thursday) despite some outstanding contracts to fill.        

Ag Concepts Fwd Prices at 22 January, 2016

Main Buyers (This Week)