WEEKLY MARKET REPORT

Week Ending 28^th November, 2014

AWEX Northern Micron Indices Comparison

MARKET BACK TO A 6 MONTH HIGH

Woolgrowers, on the whole, decided to roll the dice this week as the largest catalogue since mid January was offered as just 1300 bales were withdrawn from the original estimate of 53,800 bales. After a shaky opening session in Melbourne on Tuesday the market recovered to have all 3 centres record good gains across most micron categories by the close of trade on Thursday. The EMI added 9 cents to its value, now 1056 and in US terms a gain of 7 cents (907).  Buyers seemed to absorb the big catalogue due mainly to the sharp drop in the exchange rate to below 85 US cents on Tuesday night. The drop in prices of commodities, namely oil and iron ore, is a concern for global markets and sending exchange rates into a spin. Most indicators had subtle changes in price, rising up to 8 cents. This was the final designated Super-fine sale of the year but the majority of this selection was overlong and tender with high mid-breaks sending the 17 and finer indicators down by up to 25 cents - these types barely making prices equivalent to medium types.

Skirtings kept powering on as the good selection attracted solid buyer support. All types and descriptions across the full micron spectrum containing up to 5% VM added 20 to 30 cents while the burrier lots sold to rates comparable to last sale. The better types are now close to within 50 cents of some fleece prices. Oddments remained solid this sale despite LKS selling in buyers’ favour in Sydney to have the MCI lose 1 cent to 790. Melbourne and Fremantle added up to 5 cents for this sector as all three centres close in on 800 cents - a figure that could be reached by Christmas. Crossbreds always like a drop in the exchange rate and this week was no exception as all indicators rose by 5 to 15 cents. A good result as this sector is flooding the market, 20% of the national catalogue and 25% of Melbourne’s offering (28 micron in Sydney was the largest volume by micron on Thursday, 600 bales compared to 400 bales of 19.5).

Much debate of late has been the idea of raising the min. bale weight from 110kg to 130kg except for “speciality wools”. All relevant parties in the industry have had, in some cases, long-winded discussions at the highest level (including the AWEX board meeting today in Melbourne regarding the pros and cons). Without pre-empting any firm outcome most parties have agreed on a 120kg minimum limit to be implemented 1^st January, 2016, with the exception being fleece wool finer than 18.5 micron. A definite decision will be made by July next year.

Also on the radar are wool sales. AWI has commissioned a review of the current wool selling systems. The review has 3 main objectives: the transaction between grower and buyer; the 2^nd point is to create “competitive tension” in the sale room; with the 3^rd point being transparency in the auction system so growers knew exactly where their money was going. A discussion paper will be released on 30^th April followed by an industry workshop at the end of May with the final review delivered between July and October once all research is completed. Watch this space!!

Next week’s catalogue is slightly larger at 54,000 bales but Fremantle did finish stronger yesterday which does give confidence the market might be okay. This sale marks the highest point in the market since end of April.

Ag Concepts Fwd Prices at 28 November

Main Buyers (This Week)