WEEKLY MARKET REPORT

Week Ending 27^th January, 2012

Northern Micron Indices Comparison: Source of information: AWEX

ROCK SOLID DESPITE GREECE’S BEST EFFORTS

Not since 450BC has Greece had such an impact on the world’s economy. The tiny pocket handkerchief European country ranked the 37^th largest economy in the world has again made headlines as the possible cause of world wide recession or worse. Despite this, and against an appreciating dollar, the wool market shrugged off a previous lackluster week to post gains in nearly all categories.

At the top of the list was the significant gains posted in the super fine types not quoted above. 16 microns, for example, were over 50 cents dearer and it was pleasing to see in our catalogue on Wednesday the sub 18 micron lots rally by 50 to 100 cents. A glance at the yearly change column above will, for many growers, still look pleasing with around 200 cents or better compared to last year. It is a little harder to swallow for fine wool growers who, 12 months ago, had a brief moment in the sun, only to see this eroded by a combination of the “Greece” factor and continued strong supply. One major Italian processor commented just before Christmas that the growth in production of the sub 16 micron types has far outstripped the growth in demand, and it would take some time for the imbalance to correct itself.

The remainder of the catalogue saw widespread competition which was evidenced by a low pass-in rate. Approximately 42% of our fleece offering made above 1000 cents greasy which, to most growers, is a good result. The catalogue contained  a few lots which were passed in just before the recess and these all sold at higher levels - some over 100 cents above. Lots that contained fault; either high VM, over length or degree of cot were lines that sold well above previous passed-in prices  which is a good indication of increased competition. Cardings changed little and this sector has been a little flat for some time, but maintaining an acceptable level. There are only a few major players in this sector, particularly carbonising types and if even one or two sit back it can cause a flat spot.

One major buyer commented this week that there is a very solid base at present and things could only improve. Unfortunately though we have heard this many times and it depends on their current stock book and current orders. Obviously right now they aren’t holding much stock and must have a few orders. It has to be remembered though that Greece (and the other dominoes in front of it) are still a factor which we have to keep an eye on.

Next week a small offering of 39,689 bales will be offered which should keep them keen.

One final note, March 24 is the date for the Woolstore opening. Mark it in your diary, details will follow soon!

Agrisk FDIC Indicative Quotes 27/01/2012

MAJOR AUCTION BUYERS (Bales)

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

                Eastern 1194 cents é (4) compared with 19/01/12                               1.0520 é 0.0123 compared with 19/01/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1227 cents é (3) compared with 19/01/12