WEEKLY MARKET REPORT

Week Ending 9^th December, 2016

AWEX Northern Micron Indices Comparison

BUYERS EXACT REVENGE!

The market went in all directions - up, down and sideways. The subtle drop in prices in Fremantle last Thursday was just a precursor to what was to unfold this week. With volumes exploding this and next week, buyers took their foot off the accelerator from the get-go. From the outset in Melbourne on Tuesday the market came back to earth with a thud. As Sydney and Fremantle joined in on the 2^nd day, those 2 centres fell to Melbourne’s levels that actually sold to sellers’ favour. The final day saw a consolidation of up to 15 cents to finish the sale on a firming note. By week’s end all microns gave up 30 to 50 cents with “off types” and lots outside specs neglected to fall up to 100 cents. Even with the big drop in prices some lots with up to 2.4% VM and a bit over-long (110mm) just to name a few, made 25 to 70 cents above their indicators.

Skirtings also felt the full force of price reductions, large falls to open proceedings followed by a final session recovery. Across all types and descriptions, regardless of VM, losses ranged from 40 to 50 cents. To everyone’s surprise the largest crossbred catalogue since January (23% of the eastern seaboard offering) performed the best of any sector. Finer types <28 were up to10 cheaper while 30s and broader lifted by 20 cents. Cardings also seemed to be less affected than their merino combing wool counterparts. Locks were the main culprit giving up 15/25 cents while STNS and CRT remained solid all week.

The EMI lost 29 cents to 1349 - its largest weekly fall since early November (28 cents) wiping out 30% of the past 3 week’s gains. In $US terms the loss equated to just 9 cents - now 1012 - due to the strengthening $A. The spike in volume following the “bull run” over the past month; this week’s sale blowing out by 18% from estimates 2 weeks ago; and some outstanding orders finished coupled with a rise in the A$ all conspired to this sale’s correction. The extent of the opening day’s fall in Melbourne (25 to 65 cents) took everyone by surprise as talk on the showfloor was in the range of 20/30 cents. As one buyer put it, half of the fall was due to “local exporters panicking”, not a full pull-back in price by the Chinese as they are “still desperate for wool”.

Next week will be the final sale before the 3 week Christmas recess. The anticipated catalogue of 56,000 bales is the largest since mid January but, coming off a slight recovery on Thursday and futures out to February, 2017, are 10 cents dearer than the physical price, there may be enough demand about to soak up the extra 20% in volume from estimates early last week.

Ag Concepts Fwd Prices at 9 December 2016

Main Buyers (This Week)