WEEKLY MARKET REPORT

Week Ending 5^th July, 2013

AWEX Northern Micron Indices Comparison

SEASON STARTS ON A TOUGHER NOTE

There was no respite for the wool market as the opening sale of the season continued on from where last season finished-last week-.The slightly dearer market in Fremantle last Thursday didn’t filter through to this week’s Eastern Seaboard only offering of 34,000 bales. Sharp falls across all fleece indicators, resulted in the EMI giving up 36 cents to open the 2013/14 season, now hovering at just above 1000 cents (1011). A couple of factors conspired against us to send the market in a downward spiral - the biggest weekly fall in three months. Whispers of credit pressure in China and the raising of interest rates to borrow money bought a few mill’s buying patterns to a halt. Most buying houses and mills were accessing money under 6%, but now all rates have jumped to over 7 %. Even before this rise, murmurs of difficulty in accessing finance were more and more common. Also, news emerged this week of a major Chinese processer in trouble with big volumes of greasy and processed stock to be offered to the market at a discount to auction prices. With the exchange rate still jumping around, even with a real possibility that it will fall through the 90 cent barrier and these two other factors now very much in play, still makes trading a tricky business.

Most fleece indicators, 17 to 21s, conceded 35 to 55 cents with 22s finally adjusting to a level close to, but still ahead of, the 19.5 to 21 indicator giving up 66 cents to close at 1101. Despite these large falls and big discounts back in vogue for colour, tender and cot, the best style, FNF lots over 40nkts attracted solid support. A small selection of Spinners in ultra-fine micron ranges gained significant premiums over the lower style types and saw the 16.5 indicator add a modest 3 cent rise to its value.  One buyer, New England Wool, a specialist super-fine buyer, commented on the outstanding preparation of one of our clips in the catalogue from Brewarrina. He bought 41 bales of this clip’s fleece wool with specs averaging 18.68 mic, 0.8 VM, 72% yld, 87mm, 45 nkt and an average mid-break of 51%, which led him to pay 15 to 25 cents clean above the indicators for these lots. This order, for renowned Italian processor, Barberus, specifies “Spinners” style or better, the buyer couldn’t let these best-topmaking wools escape him, saying they would fit into the order perfectly. Another lot from Gilgandra at 19.5 micron and 1.7 VM was 13 cents better than the indicator, so even in a retreating market there can be some bright spots. Well done to both growers!

The good run that room 2 lots have had over the last 2 months continued to compound as all sectors lost ground on both days. Skirtings fared the worst, as the opening session saw a 30 cent fall for 5% VM and a 40 cent loss for burrier lots. Thursday saw the higher VM lots fully firm as the 3% VM types gave up another 10 cents. There was very little movement in the carding sector as the MCI lost just 1 cent to have the all time record still in sight, but not broken yet. Crossbreds didn’t escape the carnage either as 26 to 32 microns fell 5 to 10 cents.

Next week is the final sale before the annual three week winter recess. Fremantle is back on line to have a large national catalogue of 53,000 bales - the biggest since early April with a market not moving too much either way.

Fwd. Price Trades W/E 05 July, 2013

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

1011 cents ê 36 cents compared with 28/06/2013                                 0.9111 ê 0.0210 compared with 28/06/2013

Northern Market Indicators (AUD cents/kg clean)

1026 cents ê 33 cents compared with 28/06/2013