WEEKLY MARKET REPORT

Week Ending 22^nd May, 2015

 AWEX Northern Micron Indices Comparison

FALLING DOLLAR HELPS MARKET

The correction that the market had last sale didn’t flow through to this week’s sale. Much of the talk on the showfloor was of a 10 to 15 cent fall. Very few buyers were calling it “unchanged or slightly cheaper”. In fact, they all got it wrong as a good opening day’s lift was followed by a price consolidation on Thursday resulting in a 7 cent rise for the EMI on the back of better performing Room 2 types rather than the fleece wools (now at 1242 cents). The falling exchange rate over the past week from above 81 cents to below 79 - a drop of 2.5 cents - certainly helped. In US terms the shift in currency saw the market fall 22 cents to 981. The only indicators to finish in negative territory were 17 to 17.5s just in buyers’ favour. Most other indicators added modest gains of up to 7 cents with 19, 22 and 23s rising by 10 to 15 cents.

Skirtings out-performed their fleece counterparts as all types and descriptions finished the sale 15 to 25 cents higher. This sector is benefitting from the good quality of the selection, not being hindered by heavy cott and colour, with the high VM types absorbed by the exporters as the quantity of low VM lots is still quite large. Once again cardings continued to re-write the record books. All 3 centres had their MCIs post double digit gains as all types in this sector added 5 to 25 cents to their values. The rise in the Melbourne MCI now stretches for 11 weeks - a 163 cent jump. This is closing in on a record run, the best being 13 weeks in 2001. Crossbreds had the quietest sale as quantities fell to their smallest selection for 8 months – 4,314 bales (10% of the national catalogue). The market remained virtually unchanged for this sector despite the favourable shift in exchange rates.

The favourable move of currencies certainly played its part in stopping the market’s retreat This, coupled with decreasing quantities has kept pressure on exporters to keep buying as playing a waiting game could be costly if the market keeps edging higher. Quantities have been static around 43,000 bales for the past month and will be flat out to climb much above this figure through June. One topic of conversation amongst buyers is the sudden dominance of Chinatex since the Easter recess - one of the big Chinese topmakers. Of the 13 selling days up until yesterday only twice have they been out of the top 2 buyers, buying an average of 14.75% of the national offering. One would hope they don’t take their foot off the pedal as no-one thinks there is another buyer to fill their shoes to keep the market where it is. If they do back off from their high volume buying, then the market is most likely to fall but how far is anyone’s guess. As mentioned earlier, the exchange rate and decreasing quantities will help the market maintain these levels.

Just 5 sales remain till the end of the season. Year to date shows 120,500 more bales sold (7.2%) than the previous year. No, there is not more wool around, but plenty of sale 99 (hold) wool coming onto the market due to a rise in prices and, since Christmas, more wool being offered due to a bad wheat harvest in Northern NSW and Western Victoria. We sell next Wednesday with550 bales on offer. Talk is a solid to sellers’ favour market.         

Ag Concepts Fwd Prices at 22 May

Main Buyers (This Week)