WEEKLY MARKET REPORT

Week Ending 26^th February, 2016

AWEX Northern Micron Indices Comparison

 EXCHANGE RATE SPOILS THE PARTY

 The soft finish to last week’s sale was a precursor to the market’s direction this sale. Forecasts of a national roster just shy of 50,000 bales had the desired effect to take any urgency out of buying strategies this week. This, coupled with a sharp rise in the currency that peaked at 72.50 cents on Wednesday was enough to send the market on a downward trend after 4 days of rises over the past 2 weeks. The EMI lost 17 cents over the course of the sale to 1268 cents. The strengthening exchange rate saw the market lose 11 cents in US$ to 910 cents. Since the resumption of sales in January the EMI has moved up and down in a 30 cent range, 1265 to 1295 cents, fluctuations due mainly to exchange rate movements. Most of the damage was done on the opening day with some sort of recovery staged in some microns on the final day.  Losses ranged from 15 to 25 cents for 18 micron and broader with 17 and finer ranging from 10 cents cheaper to sellers’ favour with the cracking types  in these microns up to 100 cents higher and even with a large selection of 3 to 8% VM fleece types on offer these held at previous weeks’ levels.

Merino skirtings also suffered from a lack of buying urgency as only the superior types escaped the sale unscathed as all other types and descriptions gave up 10 cents. Cardings had an up and down sale as early falls of 10-15 cents were regained on Thursday to have the MCI record a 1 cent rise for the week. Crossbreds had a mixed sale as 25s and finer looked 10 cents dearer, 26s in buyers’ favour and 28 to 32 micron 10 cents lower - this sector now 21% of the offering.

Not surprisingly after the “dead cat bounce” release of AWI’s Wool Selling System Review, the media are struggling to get any mileage from it. Last week The Land’s wool correspondent met with wool exporters in Melbourne to see what inspiration they gleaned from the review. Initially, we’re told it was a very disappointing “nothing” but after some further prompting they agreed that it would be good if all sales were centralised into Melbourne. Surprise, surprise!

Our position hasn’t changed from last time this was reviewed in 2009 when the costings showed a total saving of less than $2 a bale across the whole industry. We believe the latest figures are very rubbery but still at around $3 a bale we can’t see where there are any positives in this for our growers or ourselves. In fact our costs would increase whilst buyers may save money, but how do we know that will be passed on? Currently we have one of the lower Buyer Service Charges with others operating here in Dubbo up to $8 a bale higher than us and we struggle to see where that saving to buyers from our catalogue is passed on through price. We would like to think so but difficult to see. Any savings from centralising sales to Melbourne would be no different!   

Main Buyers (This Week)