WEEKLY MARKET REPORT

Week Ending 31^st January, 2014

AWEX Northern Micron Indices Comparison

HAPPY CHINESE NEW YEAR!

Another big reduction in the weekly offering of 8000 bales to only 35,000 this week saw the third smallest national catalogue of the season so far. The high withdrawal rate and pass-in % higher than normal over the past three weeks has seen the year on year totals fall to 2.7% (30,000 bales) behind the previous season’s totals - certainly figures that would be concerning to mills in China. In stark contrast the opening four sales have had a big discrepancy in weekly volumes. The opening two sales saw an average of 53,000 bales compared to the past two weeks of only 39,000 bales, numbers that have our customers overseas scratching their heads as to how these volumes can fluctuate so widely.

The falling exchange rate (now under 88 cents) looked to assist the market early in the sale as a stylish selection out of Goulburn pushed 18s and finer 20 to 45 cents higher with some of the “more stylish” spinners’ types looking up to 100 cents better than the quotes. These types did soften on the final day but still recorded good gains. Medium microns had a stable sale barely moving from last sale’s quotes. Competition was widespread as Techwool (10%) was outgunned by Chinatex and Tianyu in the fleece room buying a combined 28%. Again some fleece lots we sold did perform better than the indicators by up to 20 cents.

Skirtings continued on their merry way as rises over the two days saw price increases of 25 cents with emphasis on 19 micron and finer and VM levels of <6%. Tianyu flexed their muscle in this sector purchasing 25% of the offering. Some buyers are still quizzing us on when the volume and level of VM will increase. This is hard to answer but the prevailing dry conditions will keep big volumes of VM well and truly out of the wool-clip for some time. Cardings edged higher on the east coast but a sharp drop in locks on Thursday in Fremantle saw their indicator drop 10 cents. Big numbers of crossbred wool continue to flood the market. A massive 31% of the Melbourne catalogue was crossbred wool with that sector making up 21% in Sydney. Despite this glut of wool, there was a modest rise in prices, with 25s matching the finer merino indicators, jumping by 20 cents. Techwool topped the buying list in this sector securing 20%.

Next sale sees the first of 2 designated Super-fine sales to be held in Sydney in February. This, coupled with Chinese New Year celebrations commencing today and a larger national catalogue of 45,000 bales, always has sellers more-so than buyers nervous about price movements for next week. Quantities are slowly building up to 50,000 for the next three weeks but the exchange rate is in our favour despite poor manufacturing data coming out of China this week which has played havoc with global stock markets. We sell early next Wednesday with 1000 bales on offer. With some tidy Yass and New England super-fine clips up for sale hopes are high that the market can edge a bit higher despite China being in holiday mode. Our late tip out of China is fleece movements will depend on style and specifications with skirtings, cardings and crossbreds should be rock solid.

Main Buyers (This Week)

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

1132 cents é  4 cents compared with 24/01/2014               0.8735 ê 0.0062 compared with 24/01/2014                        

Northern Market Indicators (AUD cents/kg clean)

1158 cents é  6 cents compared with 24/01/2014