WEEKLY MARKET REPORT

Week Ending 5^th February, 2016

AWEX Northern Micron Indices Comparison

CHINESE NEW YEAR CELEBRATIONS START EARLY!

Hopes of a solid market were dashed early in the week as Melbourne (selling in isolation on Tuesday) drifted lower and that trend continued for most of the sale across the 3 centres. It seems as though some participants in China started their New Year “party” a week early rather than this coming week as official celebrations are due to start on Monday whilst chances of doing any business diminished as the sale progressed. Reports of fresh enquiry converting into sales didn’t eventuate as the market fell by 15 cents, the EMI now at 1265. An increasing exchange rate saw the EMI post a 7 cent gain in US terms. Despite this sale being a “designated super-fine sale” in Sydney these types (as well as the medium microns) all suffered losses, 18.5 to 19s the biggest casualty losing 30 cents. 17.5 to 18 and 19.5 to 22 fell 10 to 20 cents as other microns recorded little movement as discounts for “off” types grew (colour, cott, high mid-breaks and VM).

Skirtings were also caught up in the falling market as all types and descriptions across all microns and VM levels gave up 30 to 35 cents. Cardings finally ran out of steam, this sector suffering the biggest losses of the sale, the MCI falling by 44 cents now at 1106. Losses were similar across the board for all types in this sector, 40 to 45 cents down from last week. Crossbreds weren’t immune from the retreating market as most of the falls occurred on the opening day. The losses ranged from 15 to 20 cents by week’s end this, despite the offering dropping to 23% (8400 bales) in the 2 eastern centres. This may well be the start of reduced offerings for this over-supplied sector.

The softer trend was a reflection of the exchange rate direction, an upward shift of 2.5% on Wednesday night. Demand remains reasonably strong as sporadic new business is available but sensitive to price when expressed in $US/kg the ruling factor. Buying activity did seem to pick up late on Wednesday but the lift in the $AUD overnight saw the buying  urgency not required on Thursday, bar the absolute cracking super-fine types that lifted by 10 to 20 cents. This lift was the largest one day gain in the $AUD for over 6 months as the $US had its biggest one day loss in seven years.

The market has lost all its momentum from the opening 2 sales of the year to be at levels pre Christmas. All micron indicators (bar 19 and 19.5) slightly better, 5 to 20 cents to the good. Crossbreds, on the other hand, range from 20 to 50 cents lower. Testing figures show more reductions in volumes of wool coming onto the market. The January figures saw 8.9% and 9.4% less than that month a year ago for bales tested and weight. The progressive total for the season is less, 6.7% less bales and 6.5% less weight, still a big shortfall from last season and surely a concern in China. Weekly volumes drop back to low 40,000s for the next 3 sales hopefully keeping buyers under pressure to fill orders. With Chinese New Year upon us and the high $AUD a dearer market would be a brave call. We sell late on Thursday, fingers crossed!!!

Main Buyers (This Week)