WEEKLY MARKET REPORT

Week Ending 29^th January, 2016

AWEX Northern Micron Indices Comparison

MARKET RUNS OUT OF PUFF!

The slow down in buying urgency last Thursday did filter through to this week as the lifting exchange rate (2%) was enough to put the brakes on the rising market after good gains over the opening 2 sales of the year. Along with the rising A$, several other factors contributed to a falling market. The floods in Geelong at a scouring plant and a broker’s wool-store, access to finance locally and still larger offerings than expected all cited as influences on this sale’s market direction.

The EMI lost all of last week’s gains to close 16 cents lower at 1280. In US terms as the currency strengthened the indicator rose by 7 cents to 902. The sale opened on a softer note and worsened as the week went on as all indicators lost 15 to 25 cents - Chinese types most affected. The better quality and specified European types actually recorded modest gains on both selling days (most emphasis on 18.5 microns and finer) as the gap between these and lower spec types blew out to some might say “normal discounts”.

Skirtings followed the fleece room’s lead as minor downward adjustments on both days saw losses range from 10 to 20 cents for most types and descriptions on offer. Cardings opened the sale on a firm note but were caught up in the falling market on the closing day to have some LKS in buyers’ favour, CRS unchanged and STN back by 15 to 20 cents. Crossbred offerings continue to be massive: 30% of Melbourne’s catalogue, 27% of the whole Eastern Seaboard selection, a big % being XB LMS, shorn to satisfy Coles’ and Woolworth’s preference for shorn LMS in the saleyards. This sector faded as the sale progressed the broader microns (>30) back 10 to 20 cents while the finer types finished in buyers’ favour, a shortfall in the 100mm finer fleece types keeping these near previous levels.

Growers reacted to the downward shift in prices as 13.5% was passed in (a lift of nearly 10% from the previous sale), more of a reflection on higher price expectations than anything. Just under 40,000 bales were cleared to the trade compared to over 57,000 bales last week, reinforcing that smaller offerings always don’t equate to a rising market as other factors (as mentioned earlier) can play a big role in price direction.

Next week has a similar national selection to this sale with the stronger A$ determining initial buyer sentiment but on the flip-side some fresh enquiry converted to sales looks like the necessary ingredient to keep the market on track - time will tell!! Another factor on the radar is Chinese New Year, a week long celebration starting Monday, 8^th February, this could have a bearing on Sale 33 as most wool industry participants could be on annual leave.

Global markets seemed to settle this week as the big freeze in the US caused a spike in oil usage for heating sending the price of crude higher by 10%. We sell early on Wednesday, hopefully to a solid market.

Main Buyers (This Week)