WEEKLY MARKET REPORT

Week Ending 7^th October, 2011

Northern Micron Indices Comparison: Source of information: AWEX

STOCK MARKETS RECOVER – WOOL MARKET KEEPS FALLING

The Australian Wool Market opened the week with Melbourne only selling, offering 8,800 bales. The market was uneasy from the outset with buyers retreating from the 18.5 microns and finer in particular. The broader Merinos fared a little better, losing only 10 to 15 cents. Wednesday brought all three centres on line and a market playing catch-up in Sydney and Fremantle while Melbourne found a base and began to trade with more confidence in the Australian catalogues while over 50% of the New Zealand Merino catalogue was passed in. As the Australian Dollar value compared with the USD has now dipped well below par, the cost of Australian wool has become far more competitive than in the recent past. Thursday’s market opened with all centres now trading at the same level. Small gains have resulted, particularly in Sydney where the 18 to 19.5 microns have gained 10 to 15 cents. Melbourne brought a firm market with better styles adding to their overnight values while there continues to be discounting on low Nkt types. Fremantle’s market has also gained 10 to 15 cents on the final day with 19 to 22 microns affected. By week’s end all 3 centres recorded double digit falls of 20 to 40 cents. Sydney suffered the largest falls as 17.5 and finer collapsed, tumbling 135 to 215 cents. It seems fine wool is really on the nose and is being all but neglected as the losses now for 18 micron and finer over the past month are in the range of 250 to 400 cents. Medium types, although cheaper by 20 to 45 cents, looked to have bottomed out as Thursday did see a dearer trend for 18 micron and broader in the three selling centres. Thursday’s rising market put a stop to 10 consecutive days of falls where the EMI lost 132 cents with the losses in US cents/kg amounting to 264 cents.

Merino skirtings have, in most cases, mirrored the fleece wool with big losses on the opening day to the tune of 60 to 80 cents with emphasis on finer, low VM types with broader burry lots actually coming under buyer pressure. All descriptions and types remained solid to dearer on the final day except for heavy colour and cott which are still out of favour with most traders. Cardings rose with the rest of the market as the MCI added 8 cents to its value as stains were 30 cents up while fine locks jumped 20 cents with all other locks and crutchings solid. Crossbreds remained firm except the finer types under 28 micron cheaper by 10 cents.

Another historic day here at Don Macdonald & Co as we bid farewell to our temporary location at Troy Crossing with all wool store staff and machinery now at our new spot in West Dubbo. Only the key admin staff and the author of this report remain on the old site with the final move of staff and office equipment to take effect this afternoon. All phone, email and fax numbers remain the same and everyone is more than welcome to call in at any stage to have a look at our brand new state-of-the-art facility. Hopefully the market has bottomed out and we can look forward to improving wool prices, especially in the fine wool sector. A national catalogue of 43,000 bales is on offer next week with the mood of a few buyers we spoke to this morning

Agrisk FDIC Indicative Quotes 07/10/2011

MAJOR AUCTION BUYERS (Bales)

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

                Eastern 1164 cents (ê 29) compared with 30/09/11                               0.9641 ê 0.0154 compared with 30/09/11

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1198 cents (ê 40) compared with 30/09/11