WEEKLY MARKET REPORT

Week Ending 30^th September, 2011

Northern Micron Indices Comparison: Source of information: AWEX

STOCK MARKETS RECOVER – WOOL MARKET KEEPS FALLING

The wool market lurches from bad to worse as the EMI slips under 1200 cents for the first time since January of this year. A 42 cent fall now has the EMI on 1193 cents. All three centres recorded double digit falls on both selling days. Any sentiment of positive note has all but gone from the market as buyers struggle to sell any quantity of any type, especially in the fine sector.  Only the Crossbreds and Cardings escaped with prices in tact this week. Heavy uncertainty over Europe’s ability to ride out the current financial crises and avoid an almost certain slip back into recession is weighing heavily on confidence and direction of stock markets as the yoyo effect is a daily ritual with any sort of good or bad news driving the markets up or down. No sector of the fleece market escaped the negative tone as 18 and finer fell 105 to 140 cents - this despite a mini recovery on Thursday of 17 and finer. This recovery was partly a result of a clip of ours under 18 microns all selling above their indicator level. New England Wool bought all but 3 bales of fleece (32 bales) ranging in price from 1230 to 1520 cents and also secured the BKN, all for processing in Biella, Italy. Well done to this grower on a clip equal to anything to come out of a super-fine area. All other indicators fell from 30 to 50 cents for 19.5 to 23s and 65 to 80 cents for 18.5 to 19, again discounts for heavy colour and cott were the order of the day with some lots attracting ‘NO BID”.

Once again, skirtings were hit hard with most types feeling the effects of buyer neglect. Fine lots lost 70 to 80 cents, while 20 micron and broader fell by 40 cents, with the burrier end of the types (8 VM +) least affected. Cardings, as mentioned, remained fairly static with fine locks 20 down on the first day and stains 10 dearer on the final day with some burry bellies and carbonising pieces looking cheaper. Crossbreds moved very little as 28s lost 10 cents with all other types remaining unchanged from the previous week under a smaller offering than the past four weeks.

A tough few weeks for the market as mills and traders are not likely to commit themselves to buying wool unless they have solid commitments at the other end. Most business has ground to a halt with little prospect of orders being booked up over the next few weeks. Medium wools might be close to the bottom, but unfortunately fine types may suffer more losses as one buyer said they “cannot sell a kilo” of 18 or finer into China with only the better style clips, as was the case this week, being sought after by Italy. A quick look at the table above does tell us the market is in far better shape than 12 months ago but, going forward, the light at the end of the tunnel is small but hopeful of a turn-around in the markets fortunes sooner rather than later. Next week sees a national catalogue of 48,000 bales with little hope of a dearer market, but at least it’s rained across a wide area! And – dare we say it – Go Manly and Geelong! in this weekend’s Grand Finals (the opinion of the author of this report do not necessarily reflect those of his colleagues!)

Agrisk FDIC Indicative Quotes 30/09/2011

MAJOR AUCTION BUYERS (Bales)

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

                Eastern 1193 cents (ê42) compared with 23/09/11                                0.9795 ê 0.0220 compared with 23/09/11

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1238 cents (ê48) compared with 23/09/11