WEEKLY MARKET REPORT

Week Ending 8^th August, 2014

AWEX Northern Micron Indices Comparison

A GOOD START - WITH MORE TO COME

Wool sales re-commenced this week following the annual 3 week winter break. Initial concerns over large quantities hitting the market in August were allayed as the opening four sales will average only 39,000 bales on current forecasts. This may well change if the market trend of this sale continues. A solid rise in Sydney and Fremantle saw their regional indicators rise 11 and 23 cents respectively. Melbourne had a mixed sale as good rises in fine microns was tempered by falls from 22 to 30 micron to leave their market unchanged. An aggressive opening day saw the market post good gains with emphasis on finer types under 18 micron. Some of these stylish, FNF types with low mid-breaks were 50 to 100 cents higher as European orders saw renewed competition that easily out-bid Chinese buyers, finally rewarding fine-wool growers for style - a good result (and hopefully a precursor for the season) as we move into Spring shearing in the New England region as the volume of these types increases. The medium to broad indicators were just there as the gap between good spec lots and high mid-break, colour and burry types grew larger with some FNF lots with mid-breaks over 60 up to 50 cents off a good type.

Skirtings followed the fleece lead as gains of 25 to 30 cents were commonplace for all types and descriptions up to 5% VM with heavy burr and carbonising lots 20 cents better. The amazing thing with the improving skirting market is the closeness of the prices between low VM pieces and fleece from the same clip. This gap has narrowed to under 100 cents clean and in some cases as close as 50 cents. One grower from Euchareena had his pieces and bellies making just 30 cents clean less than a line of his fleece containing some colour - incredible prices for skirting’s and at the same time highlights that fleece prices have room to improve! Cardings made little gains as subtle lifts saw the MCI lift by 5 cents in Sydney and Fremantle and unchanged in Melbourne. The absence of a major XB buyer on the opening day saw XB fleece types lose 5 to 15 cents initially but remained solid when he re-entered the market on Thursday.

A solid start to the selling program as a lift in enquiry, (especially from Europe) downward pressure on exchange rates and the ongoing drought north and west of Coonamble (seemingly all the way to Cape York which will keep pressure on quantities) looks to have the market going in the right direction at the moment. Most pleasing was the lift in the fine wool sector as premiums for style look to be back in vogue. In fact, one buyer is offering premiums of 20 to 30% for “Spinner” style types into Italy this spring. We realise that most of our clients would not have the type to fill such an order but, if you think you have the right type, this offer is valid till the end of August with delivery up until the end of October. For more information, contact your rep.

Next week will see just 39,000 bales on offer with our ever reliable source saying “no cheaper” with a good range of types sold into Europe and China last night. We sell on Thursday with 1700 bales for buyers to fight over.

       Main Buyers (This Week)

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

1031 cents é 5 cents compared with 11/07/2014                                   0.9267 ê 0.0134 compared with 11/07/2014

Northern Market Indicators (AUD cents/kg clean)

1046 cents é11 cents compared with 11/07/2014