WEEKLY MARKET REPORT

Week Ending 25^th October, 2013

AWEX Northern Micron Indices Comparison

ON THE BOTTOM FOR NOW??

The impact of a rising exchange rate looks to be having the effect on the market that we feared as the market took another backward step this week. A 21 cent fall in the EMI saw it retreat to under 1100 cents to 1092. The fall in Melbourne was more savage than up here in Sydney, 24 cents against 16. In US cent terms the drop was far less due to the rising AUD$ - a fall of only 6 cents. The past four weeks have seen the currency jump from under 94 cents to a 4 month high of 97.50 on Wednesday, when we sold, but the market is much the same.

The small NZ only offering in Melbourne on Tuesday, although hard to gauge with shipping costs and exchange rates, looked largely unchanged from last sale despite 24% passed-in but sentiment changed quickly on Wednesday and Thursday as falls across the board saw the finer indicators - 17.5 and finer - lose 30 to 50 cents. The medium to broad types weren’t punished as much with18 to 19s back 25 cents and 19.5 to 22s losing 10 to 15 cents. Melbourne’s losses were much more severe (but even) giving up 25 to 35 cents. We sold first up on Wednesday and looked to have escaped most of the carnage as most of our middle micron lots (up to 2% VM and strengths as low as 27 nkt) made similar prices to last sale with one lot making 1250c clean while some of the FNF, high mid-break lots made 10 to 20 cents less than their less fancy counter-parts.

For the first time in a long time, skirtings took bigger hits than the Room 1 fleece types. Discounts for cott and colour looked to be back where they would normally be as we passed in a few lots with these faults, as the buying trade picked the eyes out of the selection. Small reductions on the opening day led to bigger losses by Thursday to see all descriptions track down 30 to 40 cents - the largest falls in this well performing sector for a long time. Cardings took a backward step also as falls of around 10 cents for locks and stains saw the MCI lose 9 cents to 820 cents. Crossbreds weren’t immune to the higher exchange rate as finer indicators, out to 26 microns, gave up 15 to 20 cents while the broader types lost up to 10 cents.

Despite the EMI suffering back to back falls totaling 35 cents, most sectors of the market remain at good levels. Skirtings, Cardings and Crossbreds are at 2 year highs with medium fleece types at 12 month highs. As mentioned earlier, the fine-wool and super-fine sectors remain flat as 17.5s sit only 90 cents higher than 22s, 1293 to 1203 in Sydney. The indicators are even tighter in Melbourne as an 89 cent gap is all that separates 17.5 to 23s, incredibly close considering the gap was 280 cents 12 months ago! This illustrates the lack of medium microns and the over-supply of sub 18 micron types.

Thursday’s firm Fremantle market, where some indicators rose 5 cents, gives us hope that the falling market might stop for the time being. Last week did the same where the west gave us a good finish but didn’t filter through to this sale, but word from our reliable sources is plenty of business done last night, so market looks unchanged next week.                                         

Main Buyers (This Week)

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

1092 cents ê 21 cents compared with 18/10/2013                        0.9667 é 0.0126 compared with 18/10/2013

Northern Market Indicators (AUD cents/kg clean)

1115 cents ê 16 cents compared with 18/10/2013