WEEKLY MARKET REPORT

Week Ending 16^thMay, 2014

AWEX Northern Micron Indices Comparison

EXTERNAL FACTORS AFFECT THE MARKET

Another bad week for the wool market as any hint of demand has dried up and the momentum that started before Easter has well and truly gone. The EMI peeled off by 26 cents, now down to 1020, dangerously close to the psychological figure of 1000. In US terms the fall was similar, back by 23 cents to 957 cents. The falls were across the board as most micron indicators gave up 40 odd cents bar 17s, down 24 cents, 19.5 losing 36 and 21s suffering the most down a whopping 55 cents. This sale’s fall was the largest in six weeks. All types came under heavy scrutiny from the buyers as they punished the off types as the discounts grew for colour, cott and VM over 1.5%. These types are growing in volume and are not helping the indicators. Despite the doom and gloom there were some reasonable results. A stylish, fine non-mulesed clip from Coolah saw a few lots making 10 to 60 cents better than their indicators. G SCHEINDER secured some of these for processing in Lithuania for a Norwegian manufacturer that specialises in outdoor sportswear, workwear and safety clothing for North Sea oil rig workers. Apart from these there were some tidy 20 micron lots from Carinda up to 50 cents higher than the indicator. Well done to both growers but unfortunately those results are few and far between.

Skirtings followed the fleece room as most types and descriptions fell by 10 to 20 cents with the finer microns carrying low levels of VM most affected. Cardings had a steady sale with locks being the only type to move - a reduction of 5 cents with stains and crutchings in sellers’ favour. Despite the slight fall this sector of the market is still at record levels as locks are making, in some cases, over 500 cents, not far behind some growers “BKN”. Crossbreds ended the sale with mixed results as the finer microns - 25/26 - lost 10 cents in Sydney with the same micron in Melbourne adding 15 cents to 782, a gap of 37 cents. The broader edge looked solid to sellers favour.

The sour taste that the market is leaving has people scratching their heads. From credit problems in China to the unrest in Ukraine, it would appear any issue to help cause uncertainty in the market is being trotted out. The government in China looks to be implementing tighter regulations on the banking sector in regards to lending criteria thus making it more difficult to give businesses finance, including woolen mills, thus limiting their purchasing power. The less money in the system leads to less competition and lower prices. Quantity or, more to the point, lack of is not the issue as just over 60,000 bales has been cleared to the trade in the past 2 weeks as 16% has been passed-in in this period -30% of fleece wool in Fremantle was not cleared to the trade this sale.

Next week will see a small national offering of 34,000 bales with just a one day sale in Fremantle and barely enough to sustain a 2 day sale in Sydney. We offer 1000 bales on Wednesday to hopefully a solid market, fingers well and truly crossed!!

Main Buyers (This Week)

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

1020 cents ê 26 cents compared with  9/05/2014                                  0.9380 é 0.0011 compared with 9/05/2014

Northern Market Indicators (AUD cents/kg clean)

1037 cents ê 26 cents compared with 9/05/2014

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

WEEKLY MARKET REPORT

Week Ending 2^nd May, 2014

AWEX Northern Micron Indices Comparison

OFF TO A STEADY START

Hostilities resumed this week after the annual Easter/Anzac Day recess last week. The market continued in the same vein as the fortnight leading into Easter, albeit more subdued.  The market made steady gains on the Eastern seaboard, an 8 cent rise to 1053, whereas Fremantle’s market was pushed 20 cents higher as its indicators recorded rises of 20 to 40 cents. In US terms the market actually lost 1 cent, to 982, due to the drop in the exchange rate. Most emphasis was on the medium to broader merino indicators as 20 to 23 micron lifted by 20 to 30 cents. 19 to 19.5s enjoyed a 10 to 15 cent rise as 18.5 and finer put on around 5 cents. All types and descriptions came under strong buyer pressure as Thursday’s consolidation followed Wednesday’s good start to these 9 weeks of sales till the end of the season. The largest national catalogue for 6 sales didn’t spook the trade as well over 95% of fleece was cleared in Sydney.

Skirtings enjoyed the continued good support from exporters as they concentrated more on the finer types. 18s and finer with < 3% VM  added  10 to 20 cents while all others were quoted solid to 10 cents better depending on micron style and VM. Cardings also enjoyed the renewed buyer interest as they shook off the subdued fortnight they had pre Easter to have the three centres post 10 cent gains for their regional indicators as the two Eastern centres approach the 800 cent mark with all types and descriptions rose by 10 to 15 cents. Most surprising was the subtle fall in the crossbred sector of around 5 cents as volumes start to dwindle.

A few statistics released this week would be ringing alarm bells in China. The year-on-year offerings have now opened up to 104,190 bales down - a fall of over 6%. Reinforcing this fall in volume is the monthly release of coring figures by AWTA.  April saw a massive drop of 20% for lots tested, no. of bales and weight when compared to April 2013 (public holidays playing a part in this fall). When compared to last season, July to April don’t look as bad but still a fall of just over 5%. The Australian Wool Production Forecasting Committee has revised down the shorn wool production to 340mkg (back by 3.4%) reflecting a drop in sheep shorn and lower fleece weights due to tough seasonal conditions and higher slaughter rates.

The sluggish price for fine and super-fine fleece types is again being hampered this season by an increase in volume of 18.5 and finer. This season to date has an increase of 14,300 bales finer than 18.5 and a decrease of 13,900 broader than 21, mainly due to drought conditions fining up the clip. This year’s average for adult fleece wool is 18.53, finer by half a micron when compared to the 2 previous season’s average of 19. Next week will see only 31,000 bales up for grabs the smallest sale since last August, the first of a string of rosters below 40,000 bales keeping the pressure on exporters.

Ag Concepts Fwd Prices at 2 May, 2014

Main Buyers (This Week)

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

1056 cents é  8 cents compared with 18/04/2014                                  0.9296 ê 0.0076 compared with 18/04/2014

Northern Market Indicators (AUD cents/kg clean)

1075 cents é  8 cents compared with 18/04/2014

WEEKLY MARKET REPORT

Week Ending 17^th April, 2014

AWEX Northern Micron Indices Comparison

ANOTHER GOOD RISE BUT …..??

Last week’s recovery and momentum kept going into this sale - the final series before next week’s recess. All three centres exploded out of the blocks to average a 25 cent surge on the opening day, this being the largest daily rise in seven months. This solid rise was somewhat tempered by a final day hiccup in Melbourne and Fremantle as higher VM and lower yielding types were neglected but Sydney built on the previous day’s gains by around 10 cents. By week’s end the EMI added 29 cents (1048) to its value. Gains of 30 to 50 cents were common across all indicators with some of our better spec lots 20 to 30 cents better than the indicator. One lot of 18.8 with 1.3%vm made 35 cents better than the indicator and 36 cents higher than an FNF lot with identical micron, both lots over 40nkt, the latter with a high mid-break of 72% against 53%, this being the difference. Even dusty part tender lots were beneficiaries of the good market, some up to 15 cents higher than the indicators, (rarely seen in lower style types). Just 1611 bales of fleece were offered on Wednesday, the smallest daily selection in 5 years.

Skirtings continued on their merry way as both days recorded solid increases to see a 40 to 50 cent jump in prices with good length lots out to 8% vm being most keenly sought after. Crossbreds weren’t immune from the rising market as good alternate day jumps on the eastern seaboard saw 28s and finer add 10 to 30 cents to previous levels with broader indicators up to 5 cents higher. As was the case last week, cardings failed to fire with all types and descriptions in sellers’ favour on the east coast with Fremantle’s locks and crutchings easing by 5 cents late on the final day.

Something that clients might want to give some thought to is a new service from Ag Concepts, our forward marketing specialists in Bendigo. “Mecardo, Expert Market Analysis” is an information service that delivers in-depth commentary for Australian cattle, sheep, wool and grain markets in a concise easy-to-read format, providing an independent, commercial perspective on these commodity markets and their outlook. There is a FREE 3 month trial on offer, this being 2 months longer than the usual 30 day offer. This is an excellent information service that should be looked at by one and all. Please go to the link below and have a look, or contact your wool rep for further assistance on this thoroughly recommended site. Click here

It would be remiss of us not to mention the new shearing world record that was created at Don and Pam Mudford’s Parkdale Merino Stud on 5^th April. Prior to this attempt, no record was recorded for adult, 2yo, merino ewes being shorn in an 8 hour day. Two local shearers, Steve Mudford and Bob White and WA gun Beau Guelfi shore 1289 ewes in the 8 hours with Beau just 5 sheep short of the 8 hour record, 461. Next best was Bob with 432 down the shoot and Steve’s tally adding up to 396. A massive crowd was on hand with around 1000 people witnessing the final run with our very own Hunter Leeson, helping out and doing the wool-classing. Well done to everyone involved not-the-least the Mudford family for presenting the sheep in top order  to attempt the record but to provide the shed and all the organising that went with the day was a monumental effort! Our next wool sale will be in the final week of April, hopefully to a solid market. Have a good Easter/Anzac break.

Main Buyers (This Week)

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

        1048 cents é 29 cents compared with 11/04/2014                                 0.9372 ê 0.0037 compared with 11/04/2014

        Northern Market Indicators (AUD cents/kg clean)

        1067 cents é 35 cents compared with 11/04/2014

WEEKLY MARKET REPORT

Week Ending 11^th April, 2014

AWEX Northern Micron Indices Comparison

A RECOVERY …… OF SOME SORT

The faint light grew and grew. Finally the market did what we were wishing for and took a step, albeit a little one, on the road to recovery. After last sale’s steadying tone and solid final day markets in Fremantle and Melbourne, all and sundry held their breath as to what the outcome of this week’s sale might be. Both selling days produced good gains on either side of the continent, with Fremantle surging on the final day - a 29 cent jump - to give us confidence for next week. The sale opened strongly and kept going as the EMI added 26 cents, the best weekly rise for 6 months, to break back through the 1000 cent mark, now 1019. All regional indicators are now over 1000 with Fremantle at 1059, a 42 cent rise for the sale.  Demonstrating just how flat the market had been, Melbourne’s 14 cent lift on Wednesday was its largest daily gain for 6 months.  Increases spread from super-fine types to medium wools, all adding 25 to 50 cents as some FNF, low mid-break finer types in our catalogue fetched up to 30 cents better than some of the indicators. The premium being paid for the “best” style types is typical of the mixture of the selection at this time of the year. Best style and better fleeces are becoming scarcer (representing just 19% of the fleece offering) as the lower style, higher vm is growing in volume, but the selection is increasing in strength as the proportion of 40nkt types has increased sharply in the past few sales. The pass-in rate was slashed as over 96% of the fleece catalogue on the Eastern seaboard was cleared to the trade.

Merino skirtings followed the lead of the fleece sector. Whilst the increases weren’t as pronounced, the market saw 20 to 30 cent gains with most emphasis on “best” types 5% vm and lower finer than 19 micron. Most lots found a home as 98% was cleared to the trade. Crossbreds also benefitted from the renewed buyer interest pushing 26s and broader 5 to 10 cents higher, while finer microns looked 20 to 30 cents up from last sale. Cardings were the under-performers, just in sellers favour as each centre remarkably added 1 cent to each of their regional MCI.

Relief would be the first word that springs to mind. History says commodities rise and fall in price and the wool market is no different.  The ups and downs can be as big or as small as each other. What makes this even stranger is the  renewed vigour coming on the back of an upward shift in the exchange rate this week, a jump of almost 2 cents to a tick over 94 US cents, its highest level in 5 months. The rise did catch most by surprise, but the market may continue to strengthen next week according to our usual and very reliable source!

Sales move to a Tues/Wed pattern next week due to the Easter holidays. Next week’s national catalogue is 37,000 bales but Sydney can only muster 7,600 bales (slightly more than this week) one of our smallest sales for years. Next sale will see just over 600 lots of fleece in the North, 3666 bales, the smallest offering for this sector for many years. Backing up this alarming lack of quantity is the AWTA figures released for March. Less wool is coming onto the market as the period up to March this year compared to last year is 3.5% lower, a drop of 9.4 million kg (10,000 bales). This can be solely attributed to the drought which in some areas is far from over and in others the ”best Autumn” in 15 to 20 years is what we’re hearing. Let’s hope the gaps fill in sooner than later with winter just around the corner.

Main Buyers (This Week)

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

1019 cents é 26 cents compared with 04/04/2014                                 0.9409 é 0.0182 compared with 04/04/2014

Northern Market Indicators (AUD cents/kg clean)

1032 cents é 26 cents compared with 04/04/2014

Apologies for last week's link not working. We'll try this week with the following links for you to look at:

 Click here http://www.woolmark.com/working-with-wool/tested-by-nature

WEEKLY MARKET REPORT

Week Ending 4^th April, 2014

AWEX Northern Micron Indices Comparison

IS THAT A FAINT LIGHT I SEE?....

Is this it?? Could the market finally have found the bottom? The market showed signs of steadying this week as falls were less dramatic than last sale’s disastrous week. We had seen 13 straight days of reductions over the past 5 sales - the longest losing streak in nineteen months. Thursday saw the market firm up in Melbourne and Fremantle (10 cent rises across the board) and apart from 17s and cardings losing 15 cents in Sydney, its sale was solid, a relief to all concerned. Despite this encouraging news, the EMI dipped under 1000 cents, now at an 11 month low of 993 cents. Falls were in a very tight range of 10 to 15 cents, bar 19s off by 23 and just a 6 cent drop for 21s. Finer types found favour in Melbourne recording subtle increases with fine, best style 40 nkt lots up to 20 cents better. This positive tone cut the passed- in rate by half when compared to previous sales.

The ever increasing narrowing gap between fleece and skirtings finally told in Room 2 this sale as the pressure of this small price differential saw 30 to 35 cents reduced from the skirtings. In fact, with some clips, the gap is nil as we had one grower’s “BKN” make the same price as 3 of his fleece lots! The lofty heights of cardings took a hit this week as all types and categories gave up 20 to 35 cents in both Eastern Seaboard centres; the biggest weekly fall in this sector for six months. Crossbreds followed the merino fleece price pattern as losses of up to 5 cents on the opening day were somewhat negated by a firm market on Thursday - this sector now falling in volume to 17% nationally.

The first quarter of the year is now behind us. Typically this time of the year has been very buoyant for the wool market and pre-Christmas forecasts were no different to past years. Since 1979 the January to March period has closed ahead 63% of the time, but this year was the largest fall - 128 cents - since the collapse of the Reserve Price Scheme in 1991 with only 3 sales from 12 ending on a positive note. There was one positive to come out of this period with the Melbourne buyers holding a “Purple Day” charity auction for the Epilepsy Foundation. A bale of 19.3 fleece, donated by the Polkinghorne Family of Victoria was bought by Australian Merino Exports for 5000 cents to return $9350 with various other items sold raising over $31,000 in total. A great result and well done to our Southern counter-parts.

Has the market bottomed? For the time being it may have as reports of wool booked up on Wednesday night led to the consolidation on Thursday. We now have just two sales to go before the Easter recess with talk of a solid market a common theme on the show-floor. Where to after Easter is anyone’s guess but as one exporter said, if no new business was written soon the post Easter period could go like what we’ve been through (not to that extent but a softer market nonetheless). As always, demand will be the determining factor with currency shifts and quality of the clip influencing price as well, but for the moment the rot has stopped. Next week will see a national catalogue of 40,000 bales with only 8000 in Sydney, its 3^rd smallest sale in 20 years. For some interesting viewing Click here  

Main Buyers (This Week)

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

993 cents ê 13 cents compared with 28/03/2014                                   0.9227 ê 0.0012 compared with 28/03/2014

Northern Market Indicators (AUD cents/kg clean)

1006 cents ê 16 cents compared with 28/03/2014

WEEKLY MARKET REPORT

Week Ending 28^th March, 2014

AWEX Northern Micron Indices Comparison

BRACE YOURSELVES – MORE TO COME!!

The question we posed last week is still at the forefront of everyone’s thinking: where’s the bottom? This sale failed to find an answer as the market continued on its merry way down as this week’s losses almost doubled last sale’s falls. The EMI peeled off another 29 cents - the largest weekly drop in six months, now back to 1006 cents - the lowest point since the start of the season and just a hair’s breadth above the psychological figure of 1000 cents. In US terms just a 4 cent fall was recorded, 929 cents, this due to a rise in the AUD$ against the greenback of over 2.2 cents. Year on year we are now 50 cents lower than 12 months ago, in US terms a massive 179 cents cheaper, this due to the big disparity in currency rates - 12 months ago 104 compared to 92 cents today.

As was the case last week the falls of all indicators was in a narrow band, 40 to 50 cents. At the finer end of the spectrum some interest was shown for the more stylish, fnf and 40nkt lots with low mid-breaks widening the gap over the lesser types which are growing in volume. One buyer did report that prices for these lower types had steadied over the past two sales. Room 2 wasn’t immune from the negative tone as skirting prices decreased 25 to 35 cents. Cardings lost 5 to 15 cents with XBs giving up 10 cents.

The annual Wool-brokers Forum, conducted by AWI, is being held in Sydney today. Don reports that market forecasts are being revised downward from an average of 1100 to 1000 cents (EMI) for next season due to China’s economic slowdown. Other points include: over the past 20 years wool finer than 18.6 micron has increased an incredible 370%, increasing 15% in the last 2 years, thus stalling any price hike; wool that supplies the knitwear sector (prems, skirtings and cardings) will remain strong for a few more years; there is a big oversupply of man-made fibre - 3 million tonnes! China supplies 32 million tonne while global consumption is 29 million tonne; China has lowered its reserve price for cotton by US$1/kg thus putting pressure on other fibres; tight supply of cashmere is keeping its price high, but the global economy is recovering which will help. Fine wool is taking some market share from Cashmere (a very small sector of the market in volume) but again too much fine wool to see any shift in price. As the market falls many mills now have a wait and see approach whilst in this pattern. All this begged the question “how could a bullish outlook at Christmas evaporate so quickly?” The main reasons are over-supply of man-made fibres and the lowering of cotton prices.  

So, unfortunately no good news for the market but the rain has been very good and is filling the gaps that missed out early on. We hope the market will steady but reports from China look bleak for the run to the end of the season. Those thinking of taking a forward position for part of their clip would be advised to lock in a price sooner rather than later.

Ag Concepts Fwd Prices at 28 March

Main Buyers (This Week)

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

1006 cents ê 29 cents compared with 21/03/2014                                 0.9239 é 0.0220 compared with 21/03/2014

Northern Market Indicators (AUD cents/kg clean)

1022 cents ê 31 cents compared with 21/03/2014

WEEKLY MARKET REPORT

Week Ending 21^st March, 2014

 AWEX Northern Micron Indices Comparison

STILL FALLING.....WHERE'S THE BOTTOM??

The market continued on its downward spiral this week as the benchmark AWEX EMI conceded another 19 cents to 1035. In US cent terms the fall amounted to 22 cents (now down to 933) a massive 189 cents (17%) drop when compared to this time last year - this big disparity due to the fall in the exchange rate (back 14 cents compared to 12 months ago). Re–offered wool made up 10% of the offering indicating that some growers are putting passed-in wool back into the market and letting it go before the market worsens even more, but still there is some grower resistance as the pass-in rate was 16%. Most microns gave up 20 to 30 cents, with 17s back by 15 and finer types falling by 30 or more. The typical autumn offering has arrived, with fewer quantities of best top-making types and larger volumes of low spec lots with higher VM and more dust and tender wool due to the very dry conditions over the summer. The drop in the quality of the selection is weighing on the market, but is not the major factor driving the market down.

Skirtings tended to be less affected than their fleece counterparts as the price differential between the two sectors continues to shrink. Most types and descriptions lost 15 to 20 cents over the course of the sale. Even with a reduced quantity of crossbred wool, 20% of the selection on the eastern seaboard, the market lost 5 to 10 cents across all types. Cardings weren’t immune from the negative market sentiment as all three centres slipped by an average of 7 cents as locks and crutchings backed off by 10 cents in Sydney.

With the falling market comes less opportunity to lock wool in at reasonable levels. At the moment we only have 3 growers with cover ranging from 1250 to 1140 cents for a total of 10,000 kg. We have forward orders waiting to be booked ranging from 1200 to 1300 cents for 27,500 kg. These levels look completely out of reach considering where the market is, and more importantly, where the market might be heading. These growers might have to reconsider their target price as some cover at a lower price will be better than no cover at all. A forward price above 1100 cents may well be a good price through the winter.

It seems that nothing at the moment can stop the falling wool market. A lack of demand is the major problem we face at the present time with short supply, small offerings and seasonal conditions affecting quality not influencing buying patterns. Twelve months ago the market was in free-fall losing ground all the way through to mid May when 966 was the low point of the market (a figure that is only 70 cents away). Let’s hope we don’t get there. National quantities remain in the low 40,000s for the foreseeable future, but this won’t help the market. We sell next Thursday with 1100 bales on offer.

                                                                  Ag Concepts Fwd Prices at 21 March 2014

Main Buyers (This Week)

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

1035 cents ê 19 cents compared with 14/03/2014                                 0.9019 ê 0.0048 compared with 14/03/2014

Northern Market Indicators (AUD cents/kg clean)

1053 cents ê 18 cents compared with 14/03/2014

WEEKLY MARKET REPORT

Week Ending 14^th March, 2014

 AWEX Northern Micron Indices Comparison

DON’T DESPAIR – IT’S BEEN WORSE!

The Australian wool market suffered heavier losses this week than what it had experienced over the past month. All three centres fell an average of 18 cents, with the AWEX EMI shedding 18 cents to 1054. This is the largest weekly loss in 4 sales and leaves the market at its lowest point in 6 months and a massive 90 cents behind the pre Christmas peak of 1145. The market had been in a 20 cent range, 1080 to 1060, for the past month but could not sustain this up and down movement as demand waned to a point where it is a case of when will demand lift and by how much. Most micron indicators, 17 to 23s, suffered losses of 20 to 35 cents with 16.5 back 10 cents. Some finer micron types, did achieve solid premiums on lots with a high nkt reading over 50 and low mid-breaks and best top-making and spinners styles. Pass-in rates soared to 30% for fleece types on Thursday sending a clear message to buyers that there is a fair amount of resistance to these levels.

Skirtings fared better as all types and styles were quoted as sellers’ favour. Cardings had a good sale with a market that ended the sale up to 5 cents better on all descriptions bar average bulk and colour locks. Crossbreds held their own in Sydney, but were 5 cents easier in the south due to another big offering - over 26% of the Melbourne catalogue.

Supply and demand are the key drivers for any commodity’s price fluctuations and wool is no different. Time and again we hear buyers squeal when quantities balloon above 50,000 bales and there is, according to them, some justification for the market to fall but when quantities are flat out to average 43,000 bales a week, over-supply isn’t an issue and won’t be for the foreseeable future. The lack of demand from China is stagnant at best, thus hurting the market at present especially at the finer end of the market. Medium types are getting close to low point with skirtings, cardings and crossbreds going great guns. 

One buyer reported a “fair amount of stock on hand” which, when cleared, will see more orders enter the market, while another buyer who booked up a few passed-in lots this morning thought the market may have bottomed out. Let’s hope he’s on the money. Production has decreased as AWTA figures reveal a 10% drop in volume for February when compared to that month in 2013. This must, at some stage, ring alarm bells in China. A growth target of over 7% in the Chinese economy does bode well for increased demand, sooner rather than later hopefully! This, coupled with the improving conditions in the USA and Europe, should be a positive outlook for increased consumption and better returns at the farm gate. A stable market would be a good outcome this week.

   Ag Concepts Fwd Prices at 14 March

Main Buyers (This Week)

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

1054 cents ê 18 cents compared with 7/03/2014                        0.9067 é 0.0056 compared with 7/03/2014                          

Northern Market Indicators (AUD cents/kg clean)

1071 cents ê 17 cents compared with 7/03/2014

WEEKLY MARKET REPORT

Week Ending 7^th March, 2014

AWEX Northern Micron Indices Comparison

STEADY AS SHE GOES….

Skirtings mirrored the fleece movements as an opening day loss of 15 to 20 cents was somewhat negated by a firming market on the final day. The carding market was split in two as a solid opening day led to a sharp fall for stains (back by 30 cents) on the final day to see the MCI lose 3 cents for the week. Crossbreds bucked the falling trend of their merino counterparts as solid gains late in the week saw increases of 5 to 10 cents in Sydney and 5 to 20 cents in the south. This price rise could be due to a drop in supply for this sector - back to 22% of the selection on the Eastern Seaboard as quantity should slowly dwindle as we move into autumn shearing.

Techwool flexed their muscle this week to top the buying list in all sectors bar the merino skirtings - in all buying over 5,500 bales for the week. Fremantle based PJ Morris were second in the fleece sector with Michell P/L buying 14% of the oddment catalogue and the big Chinese top-maker, Tianyu, way out in front for merino skirtings buying 20% of the selection.

Now onto China: our intrepid travellers haven’t got lost yet and seem to be enjoying themselves. Monday was spent in Hong Kong hosted by AWI.  The day started with a tour through a high end knitwear factory, L plus H, a small boutique factory employing just 60 people. They produced sweaters, cardigans, dresses, jackets and coats. The quality of the workmanship was outstanding as the attention to detail was very impressive down to the tape measure being run over sleeve, collar and leg size time after time. Next was a visit to the AWI/Woolmark offices in Hong Kong where everyone left in no doubt that your 2% wool tax levy is being well invested - especially in this part of the world where so much wool finishes up. Next was a visit to the Hong Kong Textile and Clothing University where students are educated for the apparel and fashion industries. This facility came complete with carding machines to spinning, weaving and dyeing machines. The visit also coincided with a fashion show opening complimented with Aussie wine!

Next week's sale will see the 4^th sale in a row that national totals are in low to mid 40,000s. This still may not be enough to give the market a lift by itself. We will need a lift in demand to help the market to rise.         

Main Buyers (This Week)

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

1072 cents ê  5 cents compared with 27/02/2014                       0.9011 é 0.0069 compared with 2/02/2014                          

 Northern Market Indicators (AUD cents/kg clean)

1088 cents ê  7 cents compared with 27/02/2014