WEEKLY MARKET REPORT

Week Ending 28^th October, 2011

Northern Micron Indices Comparison: Source of information: AWEX

THE GOOD, THE BAD, AND THE UGLY

We’ll get the bad and the ugly out of the way first. Our apologies go to anyone who was trying to call us this week and got the Telstra message “this number has been disconnected”. In Telstra’s efforts to transfer our main number from the Troy premises across to our new store somehow they disconnected it instead. It took them three days to find the problem and rectify it. Luckily I couldn’t get my hands on the pleasant Filipino who had no idea what was going on and, in the end, even the local Telstra boys were pulling their hair out and genuinely were embarrassed with the whole situation. Telstra haven’t heard the last from me yet.

On to the good news, after six consecutive weeks of losses the market wiped out four of the weeks in one foul swoop rising 57 cents overall. This was the largest weekly rise since February. In US currency the market rose 95 cents as the dollar also rose to be around $1.04 yesterday. The signs were there last Thursday that buyers were starting to look for quantity but we certainly didn’t expect to see several fleece indicators crack 100 cents for the week. Yesterday with only Sydney and Melbourne selling, as Fremantle was a one day sale, the pass-in rate of 5.5% was the lowest in seven months.

Rises were not only centred on merino fleece types as the skirtings also rallied around 60-80 cents which included high VM lots, of which we had plenty. Crossbreds 27 micron and finer rose around 25 cents whilst the broader types were unchanged. Cardings surprised and actually lost ground easing around 10 cents clean.

So why the sudden jump? Well one reason could be that six weeks ago the new season supply figures were showing an increase of around 15% compared to last year. We knew this couldn’t be sustained as last winter was very wet and, in many areas, shearings were running well behind, and the big sell off in WA last spring hadn’t come to the surface. Slowly the figures have been aligning themselves with last year and, as of this week, nationally we’re only up 6% on last year and WA is down a massive 21%.

The only thing to stand between now and a continued recovery is the nervousness about the economic problems in the EU and a slow United States recovery. China reportedly is still low on stocks and still growing. Not surprisingly, the major buyers this week were Chinese agents.

Luke will be back next week from his brief sojourn to the Shaky Isles to continue his weekly commentary.

                                                                   Agrisk FDIC Indicative Quotes 28/10/2011

MAJOR AUCTION BUYERS (Bales)

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

                Eastern 1215 cents (é 57) compared with 21/10/11                                  1.0490 é 0.0301compared with 21/10/11

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1257 cents (é66) compared with 21/10/11