WEEKLY MARKET REPORT

Week Ending 9^thMay, 2014

AWEX Northern Micron Indices Comparison

QUANTITY NOT TO BLAME!

The market had a disappointing week as most of last sale’s gains were taken back this week as buyer sentiment soured to see the AWEX EMI fall 10 cents to 1046. This week’s pattern was much the same as last sale but in reverse, as finer indicators lost up to 5 cents whereas 18s and broader gave up 10 to 20 cents. Growers reacted to the negative tone from exporters more than doubling the pass-in rate, 7% up to 16% this sale, as Melbourne only cleared 78% to the trade on Thursday. The big reduction in national quantities (a 25% fall on the previous sale) didn’t help the market as both Fremantle and Sydney held one day sales. It was the second smallest offering for the season (32,000 bales) and the smallest 3 centre offering for 12 months. The market looks to be split in two now as the best style, FNF types over 40 nkt with a low mid-break are just holding their own as the bigger volumes of lower spec lots hitting the market are the subject of heavier discounts, this affecting the indicators as the volume of inferior types outweighs the better style lots with these ones not making the quotes. The upward shift in the exchange rate contributed to the downward movement of the market as some buyers sat on the side-lines despite the small selection this week and into the foreseeable future.

Skirtings followed the fleece room price direction as losses of 10 to 20 cents were the order of the day. Surprisingly the finer, low VM types were most affected as buyers seemed keener on B and C fault lots that are increasing in number. Grower acceptance for these prices in this sector was far more favourable than fleece prices as 93% was cleared to the trade. Cardings bucked the negative trend of combing types as all styles and types added 5 to 10 cents in all 3 centres. Crossbred’s poor start to this run of sales continued as most lots closed the week at 5 to 10 cents lower - this despite a big reduction in quantity (just over 13% of the selection on the East coast) as crossbred shearing slows to a trickle.

A disappointing sale as most of the talk on the show-floor was solid market with the pressure of falling quantities enough to keep buyer interest at a level to consolidate the market. Sentiment changed quickly mid-week as most Chinese took a wait and see approach and this pattern could be in vogue for a few sales. Talk of regulating sale quantities to stop wild market fluctuations, as reported in The Land and on the ABC Country Hour, certainly has sectors of the trade talking. History tells us that market movements, up or down, cannot be directly related to big weekly offerings - this week being a prime example, falling market and small catalogues. A look at the two previous Spring offerings from August to November shows an average weekly offering of 42,500 bales, hardly an over-supply with no weeks over 50,000 last spring and only 5 in 2012. The first 6 months of the calendar year in 2013 saw 7 weeks above 50,000 with only 3 this year. This season is tracking 108,322 bales less being offered than this time last year.

Main Buyers (This Week)

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

1046 cents ê 10 cents compared with 2/05/2014                                   0.9369 é 0.0073 compared with 2/05/2014

Northern Market Indicators (AUD cents/kg clean)

1063 cents ê 12 cents compared with 2/05/2014