WEEKLY MARKET REPORT

Week Ending 28^th September, 2012

Northern Micron Indices Comparison: Source of information: AWEX

STILL DRIFTING

The negative mood from last week continued on as buyers seemed content to let the market drift lower. There is no real price direction as orders have dried up and, amazingly, some traders are alarmed at the increased volumes coming onto the market in the next few weeks. Two of the next three weeks are approaching 50,000 bales which, according to some experts, is “too much wool”. We have had only one sale this season where the national offering has exceeded 50,000 and only on three other occasions has the national catalogue totaled more than 40,000 bales. How can this be a case of too much wool?  Buyers would be better off saying demand is quiet rather than trotting out garbage about excessive  weekly quantity in the peak shearing time of the year. The market opened cheaper from the opening bell, 15 to 20 cents for 21s and finer with 22s off by 24 cents and 23 microns 7 cents back. This is where the market stayed as Thursday’s market settled with 19 and 20 to 23s in buyers’ favour. The EMI lost 6 cents for the week, down to 940 cents, following on from the 12 cent fall the week before. The good gains of two weeks ago are fast becoming a distant memory.

Skirtings, on the other hand, held firm and remained rock solid throughout the sale. This sector of the market is performing well and, when compared to the fleece room, most would say very well. Most types look to have recovered the losses suffered in the opening two sales after the recess. One lot of carbonising pieces passed in at 301, valued at 380 in S06 sold for 411 - a great result. Finer micron low VM lots are making over 600 cents with medium burry types in the mid 400 cent range. Cardings continued to gain ground as all types finished in sellers’ favour to see the MCI add 5 cents to 583 cents.  Crossbreds were quoted as slightly cheaper with the losses up to 5 cents compared to last week. Quantity in this sector of the market may play a roll in price direction as we hit the peak shearing period for crossbreds.

It looks as if the market is in somewhat of a “holding- pattern” with movements either side of where we are to the tune of about 50 cents through till Christmas being the most likely scenario according to most pundits. This would see middle micron wools peak at 1100 and fall to around 1000. This sale ends the first quarter of the 2012/13 selling season with the EMI losing 136 cents, exactly the same amount as the previous quarter (April to June) although September finished 6 cents up - the first month-on-month rise since March. AWI’s September report makes for interesting reading. The slowdown in China is hurting the Global economy as Raw Wool imports are back 7% (January to July, 2012) compared to the same time frame last year. The two major wool importing districts in China are reporting a 45% collapse in wool tops exports in this same 7 month period. On the flipside, domestic retail sales in China rose 14% in this same period coming off a low base in 2011. We sell last on Thursday with 930 bales on offer. Let’s hope the market can rally. One final word, go the Bulldogs and Swans and God help the Wallabies! as we have a wet long-weekend, hopefully.

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

                Eastern 940 cents ê 6 cents compared with 20/09/12                                  1.0409 é 0.0019 compared with 13/09/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 954 cents ê 11 cents compared with 20/09/12