WEEKLY MARKET REPORT

Week Ending 7^th February, 2014

AWEX Northern Micron Indices Comparison

DOWN BUT NOT OUT

The only people celebrating Chinese New Year were the Chinese. Woolgrowers who offered wool this week met a tough market as the indicator slipped by 17 cents (the EMI now at 1,115) but as the AU$ strengthened the EMI in US$ terms rose to finish the sale at 1,000 cents. A number of factors conspired to make the market cheaper. The $ rose sharply to just under 90 cents, a 2.6% rise, the largest weekly gain in 16 months. This rise came on the back of global stock markets taking a battering over the past two weeks amid fears of Northern Hemisphere economies’ growth stalling and their currencies weakening - this highlighted by worse than expected manufacturing figures coming out of China. The RBA’s decision not to adjust the interest rates also helped lift the $.This, coupled with Chinese New Year, an offering 10,000 bales up on last week and an anticipated catalogue of 56,000 bales next week (the largest since mid January 2013) it’s little wonder the market came under pressure and fell. The wildly fluctuating weekly volumes this year - a 21,000 bale difference when comparing next sale to last week (56,000 to 35,000) - is confusing buyers and making them re-think their buying strategies.  

The first designated Super-fine sale of the year didn’t live up to growers’ expectations as 18.5 and finer lost 10 to 20 cents. These falls masked the widening price differentials in this sector as a gap of 200 cents is now common between Spinners and Best Style fleeces and the Good Top-making style lots. The top price of the sale was 4,500 cents for a 13.3 micron lot of weaner wool. Even with an overall softer tone, specialty super-fine buyer New England Wool made their presence felt finishing 2^nd in the fleece sector, buying 9%,(1800 bales),  exactly half of the no.1 buyer, Chinatex (3,629 bales). Interesting to note Techwool didn’t appear in the top 4 buyers.  The middle and broad microns, 19 to 23, took the brunt of the falls losing 10 to 45 cents. Melbourne and Fremantle suffered the most as they passed in 23% of their total offering on Thursday with 26% of the national fleece catalogue passed in making Melbourne’s fleece pass-in rate their highest for 5 years.

Room 2 types, as has been the case for some time, performed well. With the better style types on offer in Sydney, fine micron and low VM lots sold to a dearer market with all other descriptions rock solid all sale. Melbourne’s skirtings on the other hand suffered 20 to 30 cent falls. Cardings had a good sale as all descriptions were quoted as fully firm with the better bulk and colour locks attracting premiums to push the MCI up by just 1 cent to 829. Crossbreds drifted lower for the week giving up an average of 5 cents under the weight of another big offering, 23% of the catalogue on the Eastern Seaboard.

AWTA has released January testing figures. When compared to 12 months ago, figures are back 8.1%. Season to season the numbers aren’t as bad, but still behind 2.7%. This equates to 6 million kgs (33,000 bales) less than last season. To date, a figure which will no doubt grow. We offer 1,175 bales next Thursday with hopes the market is solid!

Ag Concepts Fwd Prices at 7 February, 2014

Main Buyers (This Week)

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

1115 cents ê 17 cents compared with 31/01/2014            0.8967 é 0.0232 compared with 31/01/2014                        

Northern Market Indicators (AUD cents/kg clean)

1140 cents ê 18 cents compared with 31/01/2014