WEEKLY MARKET REPORT

Week Ending 28^th March, 2014

AWEX Northern Micron Indices Comparison

BRACE YOURSELVES – MORE TO COME!!

The question we posed last week is still at the forefront of everyone’s thinking: where’s the bottom? This sale failed to find an answer as the market continued on its merry way down as this week’s losses almost doubled last sale’s falls. The EMI peeled off another 29 cents - the largest weekly drop in six months, now back to 1006 cents - the lowest point since the start of the season and just a hair’s breadth above the psychological figure of 1000 cents. In US terms just a 4 cent fall was recorded, 929 cents, this due to a rise in the AUD$ against the greenback of over 2.2 cents. Year on year we are now 50 cents lower than 12 months ago, in US terms a massive 179 cents cheaper, this due to the big disparity in currency rates - 12 months ago 104 compared to 92 cents today.

As was the case last week the falls of all indicators was in a narrow band, 40 to 50 cents. At the finer end of the spectrum some interest was shown for the more stylish, fnf and 40nkt lots with low mid-breaks widening the gap over the lesser types which are growing in volume. One buyer did report that prices for these lower types had steadied over the past two sales. Room 2 wasn’t immune from the negative tone as skirting prices decreased 25 to 35 cents. Cardings lost 5 to 15 cents with XBs giving up 10 cents.

The annual Wool-brokers Forum, conducted by AWI, is being held in Sydney today. Don reports that market forecasts are being revised downward from an average of 1100 to 1000 cents (EMI) for next season due to China’s economic slowdown. Other points include: over the past 20 years wool finer than 18.6 micron has increased an incredible 370%, increasing 15% in the last 2 years, thus stalling any price hike; wool that supplies the knitwear sector (prems, skirtings and cardings) will remain strong for a few more years; there is a big oversupply of man-made fibre - 3 million tonnes! China supplies 32 million tonne while global consumption is 29 million tonne; China has lowered its reserve price for cotton by US$1/kg thus putting pressure on other fibres; tight supply of cashmere is keeping its price high, but the global economy is recovering which will help. Fine wool is taking some market share from Cashmere (a very small sector of the market in volume) but again too much fine wool to see any shift in price. As the market falls many mills now have a wait and see approach whilst in this pattern. All this begged the question “how could a bullish outlook at Christmas evaporate so quickly?” The main reasons are over-supply of man-made fibres and the lowering of cotton prices.  

So, unfortunately no good news for the market but the rain has been very good and is filling the gaps that missed out early on. We hope the market will steady but reports from China look bleak for the run to the end of the season. Those thinking of taking a forward position for part of their clip would be advised to lock in a price sooner rather than later.

Ag Concepts Fwd Prices at 28 March

Main Buyers (This Week)

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

1006 cents ê 29 cents compared with 21/03/2014                                 0.9239 é 0.0220 compared with 21/03/2014

Northern Market Indicators (AUD cents/kg clean)

1022 cents ê 31 cents compared with 21/03/2014