WEEKLY MARKET REPORT

Week Ending 9^th December, 2011

Northern Micron Indices Comparison: Source of information: AWEX

TOO CLOSE FOR COMFORT

The lack of confidence amongst the buyers that the market would do an about-face or even stabilise was on the money as far as this week’s sale unfolded.  All three centres fell over the three days of selling with the EMI shedding 25 cents to sit at 1168 cents (a seven week low). The fall was identical in US cent terms, now at 1198 cents. Something drastic would have to change in sentiment for the final sale before the three week Christmas recess to see any positive outcome next week as another big national offering (two consecutive sales of 50,000) gives China enough reason to think there is an abundance of wool about! How wrong they are. The sale started with the large Melbourne catalogue on Tuesday with 44% stored in Launceston. Most had hoped that the fall in the market would be due to the extra shipping cost associated with Tasmanian wool but this sadly wasn’t the case. With all three centres selling on Wednesday the falls in Sydney and Fremantle were large to say the least. All micron indicators recorded double digit falls - 15 to 45 cents in Sydney and 35 to 65 cents in Fremantle, their first 2 day sale since mid October. The negative tone continued on the final day as finer microns found a little support, but medium types retreated by another 10 to 25 cents. By week’s end most indicators retreated 20 to 35 cents with 20, 21 and 16.5s giving up 40 to 55 cents. Most noticeable in the last few weeks is the closing gap between the fine and medium microns. The gap between 19 and 21s is just 100 cents and 18s only 70 cents higher than 19 micron. This compares poorly with the market at the end of June with 19s 230 cents higher than 21 and the 18 micron indicator a massive 315 cents better than 19s.

Following the softer tone on Tuesday of 10 to 30 cents, skirtings lost 10 to 15 cents for 19 and finer up to 5%VM with the broader and better length AM tested lots unchanged. A similar pattern emerged on Thursday as medium micron, burrier lots posted modest gains as the finer and lower VM types gave up another 10 to 20 cents. As is the case in the fleece room, the gap is closing, this time between the VM ranges. Cardings tracked south again as locks virtually unwanted as finer locks came back 80 cents with 19 micron and broader shaving 40 cents off previous sale quotes. Crutchings fell by 20 cents while stains being the least affected, losing 10 cents. Crossbreds, again this week, were the least affected as most types drifted 15 to 20 cents lower. Next week will see another national offering close to 50,000 bales with very little prospect of a dearer market.   

                                                                   Agrisk FDIC Indicative Quotes 9/12/2011

MAJOR AUCTION BUYERS (Bales)

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

                Eastern 1168 cents (ê25) compared with 02/12/11                                               1.0265 é 0.0008 compared with 02/12/11

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1204 cents (ê28) compared with 02/12/11