WEEKLY MARKET REPORT

               Week Ending 25^th May, 2012

        Northern Micron Indices Comparison: Source of information: AWEX

FROM BAD TO WORSE

It seems that nothing can stop the market from retreating as all three centres recorded double digit losses again this week. The EMI lost another 17 cents to sit at just 1111 cents. Despite the second smallest offering of the season - 33,000 bales - and the exchange rate at its lowest in over six months (around 97 US cents) the market can do nothing but fall. Concerns over a Greek default and global worry about the remaining EU countries remaining viable in the short term and their ability to trade their way out of recession and not go broke propping up their European counter-parts is dramatically affecting confidence in the market. Caution is the name of the game as buyers and traders nervously book up wool at a snails pace almost insisting that the wool is virtually sold on the end of the pipe-line before buying in the auction room. Most micron indicators from 17 to 21 peeled off 15 to 30 cents with the low mid-breaks and FNF types least affected, dropping 10 cents. The pattern for lots with colour, cott and burr was the same as previous sales, discounting by bigger margins as the weeks go by. Some good news for finer and broader types, + 16 cents in Melbourne for 16.5 and a 10 cent gain for 23 and 24s. Even with this subtle movement in the finer microns, this sector of the market has lost dramatic ground over the past 12 months. 17 microns have lost 900 cents (37%) while 23s fell by only 16 cents (1%) closing the gap between the two to less than 300 cents - the smallest differential since 2003. An even closer gap is the 18 to 21 micron range now just 88 cents, compared to a 670 cent gap this sale 12 months ago. Incredible numbers by anyone’s reckoning.   

Merino skirtings took another hammering this week as heavy discounting continued unabated for types carrying cott, colour and heavy seed. Best types in the lower micron ranges with good specs and low VM escaped the price carnage, but heavier VM types also attracted big discounts. Most price falls were in the 30 cent range with some finer high VM lots up to 50 cents down, on the opening day with an irregular but generally unchanged market on the final day with some light VM types in sellers’ favour. Some pieces and bellies in the middle micron range with medium VM carrying a little cott and colour are not making much more than good locks and crutching’s. Oddments tumbled this week as well with the MCI falling 24 cents. Lock lost an opening day’s gain of 5 cents on the final day while stains and crutchings lost value as the week progressed down by 30 to 40 cents. Crossbreds also suffered losses on both days ending the sale 10 to 20 cents cheaper.

With the market taking a backward step so to are forward prices. Futures for July to September are about 50 cents lower than the present day physical market. With this in mind and the way the market has been tracking, locking in a portion of the clip at prices just under current levels may be worthwhile. Talk for market direction after the three week winter recess in July is not in the positive at all with more price reductions likely according to buyers and traders. If you want any more information please don’t hesitate to contact us at the office or your rep on their mobile numbers. A larger national offering of 40,000 bales will not help the market under these circumstances, Macwool sells on Thursday with 1160 bales up for grabs. At least the rain we needed came in the nick of time to most of our clients except in the far west.

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

                Eastern 1104 cents ê 17 cents compared with 18/05/12                   0.9754 ê 0.0188 compared with 18/05/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1123 cents ê 21 cents compared with 18/05/12