WEEKLY MARKET REPORT

Week Ending 14^th June, 2013

AWEX Northern Micron Indices Comparison

 STILL RISING BUT …

The market continued on its merry way as Fremantle came back on line to see a national catalogue of 31,000 bales offered - the smallest three centre offering in 2 years and the second smallest for the season. Wednesday saw all three centres record good rises, especially in the west as they played catch-up to the two Eastern seaboard centres. All fleece types in Fremantle climbed 30 to 55 cents while Melbourne’s gains were a bit more subdued - the majority up by 10 to 15 cents as the indicators in Sydney rose a consistent 15 to 25 cents. Thursday saw the market settle as subtle rises of most indicators on the East Coast was put into perspective in Fremantle as losses of 5 to 15 cents were recorded across all fleece categories. This slight correction casting a doubt over next week’s price direction, even with only 25,000 bales on offer as Fremantle stays on the sidelines again next week.

The closeness of the market cannot be more evident this week as the gap between 18 and 22 micron in Sydney is just 69 cents (1247 to 1178). The gap in Melbourne is even closer, as the 22 and 23 micron indicators are at 1198 and 1196, incredibly higher than the 19.5 to 21 indicators in both centres. With 18s at 1239, a 41 cent gap out to 22 microns is all that exists between the 4 microns in Melbourne (good for medium wool growers) but this just emphasises the lacklustre demand in the superfine sector, something that may not be solved at the IWTO conference wrapping up in Italy today.

Room 2 wools kept pace with the fleece offering as all sectors recorded healthy gains. There seemed to be a cut off point with skirtings at the 5% VM level as types under this vm level benefitted from a 30 cent rise with the burrier lots posting a 10 cent lift. Crossbreds made good gains as the finer indicators (26 to 28s) added 20 cents while the broader lots looked up to 10 cents better. Cardings again shone brightly as both MCIs on the East coast are trading above 800 cents, fast approaching the record levels of mid 2011. All descriptions of locks and stains climbed 30 to 35 cents while crutchings added 20 cents.

Our delegate at the IWTO conference in Biella at the foothills of the Italian Alps has been busy reporting back to HQ here in Dubbo via text, email and photos which are up on our Facebook page. One definite thing to come out of the conference is the uneasy relationship between the Italians and the Chinese. The Italians have publicly called on China to “stop the race to the bottom where price is the winner over quality”. The boss of G Schneider, Claudio Lacchio spoke on the importance of wool not being treated like mass produced fibres like cotton, polyester or synthetics, but like other niche fibres such as cashmere and silk and processed and marketed accordingly. Wool now only makes up 1.5% of the apparel market, well and truly making it a niche fibre. The currency shift has benefitted the Europeans more than China or the US, but business is still being done at these levels, particularly cardings, which could break price records in the next few weeks. Quantity, or lack of it, is a big talking point. Our delegate sat next to Mr Wen, the boss of Tianyu (now the largest combing mill in the world) at last night’s formal dinner, more on that dinner conversation next week!

The six week rise that has yielded 104 cents may be at its end for the moment. The softer market in Fremantle late yesterday might be a precursor for the price direction next week despite the small offering. The friendlier exchange rate and national catalogue averaging 35,000 bales a sale since Easter has helped drive the market up to these levels. Fingers crossed!

Ag Concepts Fwd. Price Trades W/E 14 June, 2013

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

1070 cents é 18 cents compared with 07/06/2013                                 0.9462 é 0.0004 compared with 07/06/2013

Northern Market Indicators (AUD cents/kg clean)

1086 cents é 24 cents compared with 07/06/2013

WEEKLY MARKET REPORT

Week Ending 7^th June, 2013

AWEX Northern Micron Indices Comparison

MARKET REBOUNDS DESPITE VITERRA’S ABSENCE

Last week’s hiccup was just that, a blimp on the radar as the market rebounded with a vengeance. Last sale’s 6 cent fall was well and truly cancelled out with a 20 cent rise this week, to have the EMI at 1052 cents - just 27 cents below the corresponding sale a year ago. In US cent terms the gap is wider (79 cents) due to the falling AUD$ which last night was trading below 95 cents. The exchange rate has now slid a full 10 cents since peaking at 105.22 US cents 8 weeks ago. In this period the EMI has added 56 cents. With just the two Eastern Seaboard centres operating and only a 1 day sale in Sydney the national catalogue only numbered 23,500 bales. The stars were aligned to see the market recover from last week’s softer tone. Good increases across all micron categories saw lifts of up to 20 cents in the medium to broader types in Sydney. Melbourne lifted even further on Thursday to have their indicators 15 to 20 cents above Sydney levels, with just 1% of their offering passed in on Thursday - their biggest clearance since January, 2011.

The room 2 catalogues weren’t left behind as all sectors traded dearer. The good selection of skirtings being presented to the buyers this Autumn/Winter added up to 30 cents for the better style and low VM (3 to 5%) types with the higher VM lots 10 cents dearer. Cardings had another good sale, particularly in Melbourne as their MCI posted a 32 cent jump to crack the 800 cent barrier (maybe on the back of their smallest offering of oddments for the season) now 802 with Sydney’s MCI at 786, a 6 cent lift, now totaling almost 100 cents for the past five weeks. Crossbreds continued to gain momentum with a 10 to 15 cent rise for most indicators.

With some of the smallest catalogues in 12 months, coupled with the favourable exchange rate and renewed demand, the market has certainly kicked along over the past four weeks and, with the final three sales of the season offering an average of 31,000 bales, buyers may well be under some pressure to fulfill commitments. The strength of medium types is evident as the gap between 19 and 23 micron is only 37 cents with 18s just another 36 cents better than 19s. The lacklustre state of the finer types, under 18, may become clearer as delegates gather in Biella, Italy next week for the 82^nd IWTO congress. Hopefully some good can come out of this talk-fest, especially for the long suffering super-fine woolgrowers and us left at home!

Export figures for April show just how reliant we are on China, setting new records for market share in two separate categories. China took a massive 86% of all exports for 19 micron and finer, while a whopping 95% of the 24 to 27 micron range was shipped to China. In other figures released by AWTA for May total lots, bales and weights compared to 12 months ago are running at -13%, -10% and -9% respectively. The corresponding figures for July 2012 till May this year are running line ball with lots down by 1.5%, with bales and weights both up almost 3%.

Next week sees Fremantle back on line with a national catalogue of 33,000 bales as all centres conduct 2 day sales. We sell on Wednesday, offering 1370 bales, the third largest catalogue in Sydney. The repercussions of Viterra and Dalgety not continuing to buy wool have not as yet been felt. The stark reality of a buyer of Viterra’s size purchasing almost 250,000 bales/year worth $350 to $400 million is a void that is going to be hard to fill by any buying organisation. Hopefully the mills that Viterra and Dalgety supplied can source their requirements from other buyers and finance can be readily obtained.

Ag Concepts Fwd. Price Trades W/E 7 June, 2013

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

1052 cents é 20 cents compared with 31/05/2013                                 0.9458 ê 0.0223 compared with 31/05/2013

Northern Market Indicators (AUD cents/kg clean)

1062 cents é 14 cents compared with 31/05/2013

WEEKLY MARKET REPORT

Week Ending 31^st May, 2013

AWEX Northern Micron Indices Comparison

A MAJOR BUYER GONE ….

Unfortunately, as our heading pre-empted last week, there was some uncertainty as to the market’s direction after a softer tone last Thursday. This cheaper trend continued into this week as an opening day slip in prices was followed by a steadier market on Thursday to see the EMI fall 6 cents to 1032. When looking at the individual micron indicators, the falls seem much heavier as 17 to 20 microns fell 20 to 35 cents with 21s, 22 and finer than 17 gave up 10 cents. A good increase in Room 2 prices (skirtings, cardings and XBs) saved the EMI from falling any further than it did as all types across all micron ranges are now included in the formula that works out the EMI and individual centre micron price guides. Even with the market in retreat we still had some good results in the fleece room. One particular grower with two lots of 22 micron (one at 42 nkt and the tender line at 31 nkt) saw the tender wool make 1179 cents clean, virtually the same as an 18.5 micron type and 45 cents better than his sound line. Upon closer inspection of our fleece catalogue, up to 20 lots looked from 10 to 40 cents clean higher than where the indicators finished, surprising us when the market report showed a negative trend.

In contrast to the fleece room, all lots in the 2^nd room continued to go from strength to strength. All descriptions of skirtings finished 10 to 20 cents higher with most emphasis on lots with 8% VM and higher. Cardings recorded good rises in all three centres with a 22 cent jump in Sydney to 780 cents - a level not too far below the lofty heights of 2011. Locks were the stand-out performers gaining 25 to 35 cents, while stains rose 15 cents and crutchings up by 15 to 25 cents. Crossbreds kept pace with the other sectors in room 2 as finer types, <26 micron were 5 to 10 dearer, while the broader indicators of 28 to 32 put on 15 cents for the week.

The cautious approach at the end of last week kept going into this week as the Chinese tried to guess where the A$ would settle. This turned out to be harder than everyone had anticipated as it moved freely from just below 97 cents to be only just above 95 early on Thursday morning and today back to almost 97 cents! Also putting a cat amongst the pigeons was the announcement on Monday that it would be the finish of Dalgety Wool Exports and Viterra Wool effective from June 30^th. More on this later. The shrinking weekly quantities would also be playing on the minds of the Chinese as the past five sales have only averaged 35,000 nationally and the next three back to 27,000. Sydney will hold its first one day sale in 5 years next week with only 8,200 bales rostered. This follows on Fremantle conducting three one day sales in a row and next week no sale.

A media report released on Monday morning confirmed weekend rumours of Viterra and Dalgety Wool Exports shutting up shop by June 30^th. Just last week Landmark, now owned by US agricultural retailer Agrium, announced a successful take-over bid of Viterra’s  Australian agriproducts, grain handling  and wool business from Swiss based commodity trading giant Glencore. Viterra was previously buying wool under the ABB name (Aust. Barley Board) when Glencore first acquired it over 6 years ago. Since 2009 they had been the number 1 buyer in Australia, securing 11 to 14% of the national clip for mills across the world. Dalgety Wool Exports, trading under the Landmark banner, took over the flagging Elders Wool International business in 2011 and have been buying about 2% of the clip since then and with the impending take over of Viterra by Landmark talk was rife on the show-floor as to what might happen. A sad day for the wool-buying fraternity.

Ag Concepts Fwd Price Trades W/E 31 May, 2013

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

1032 cents ê  6 cents compared with 24/05/2013                                  0.9681 é 0.0033 compared with 24/05/2013

Northern Market Indicators (AUD cents/kg clean)

1048 cents ê  6 cents compared with 24/05/2013

WEEKLY MARKET REPORT

Week Ending 24^th May, 2013

AWEX Northern Micron Indices Comparison

THREE WEEKS IN A ROW….BUT

Yes the week started like there was no tomorrow with fleece indicators coarser than 19.5 jumping another 20-30 cents and the finer types still inching dearer. It was surprising to open yesterday’s market report and find fleece categories again coarser than 19.5 all cheaper by 10-15 cents. The reason I say surprising is that we sold early in the day yesterday and whilst we could see it was no dearer, it certainly wasn’t that much cheaper. So, it was late in the day that the market peeled back and interestingly in Melbourne 22 microns closed six cents dearer than 21 micron whilst in Sydney they were almost par. To confirm this toady we costed some of the straight types in our catalogue and many were above yesterday’s indicator close - some by 15 cents.

The rest of the market was unaffected as skirting and cardings held their gains whilst crossbreds did likewise. Our catalogue of around 850 bales saw a total clearance across all types from a top price of 994 cents for 17.8 micron wool from Uralla in the New England to 80 cents for dags from Cooma! The best feature of this market is that nearly all types are getting good competition and value. The only sector which isn’t getting value is the fine wool sector and, sadly, this is not going to change in a hurry.

A quick glance at the crossbred section of the catalogue has prices for fleece and lambswool making anywhere from 400 cents to high 500s, and oddments from mid 200s to 400 cents.

The question is “why did the market retreat late yesterday?” Well the dollar has a bit to do with it and I can hear you saying, “but it has fallen”. Whilst it has fallen considerably over the last few weeks, it hasn’t stabilised and Chinese traders who are hearing from Chinese economists that the A$ could fall to 90cents US are being cautious. During the week the A$ went from 96.5 cents to 98 cents and back to 96 cents which caused this hesitation and Australian traders saw inquiry and orders dwindle Wednesday night and Thursday.

The reason for the continued strength in 22 microns was not China but indent orders for Japan and India where those types have to be delivered exactly to specification, whereas the stock standard 19.5 and 21 micron orders which are typical for China can be delivered finer if there is no price differential. So with such limited supply for 22 and coarser these lines are pushed, in some cases, higher than a full micron or even two finer which we saw yesterday. One 22.1 micron line in our catalogue yesterday from Nyngan made 1263 clean which was one cent higher than where the 20 micron indicator closed! The message here for woolclassers is to make a broad line to get a premium!

Our mail is that things might settle around this level, and hopefully the dollar does likewise. Supply will still be short for the next three weeks with offerings of 34,735 next week and 27,150 the week after.  We have almost regained what was lost in those first few weeks after Easter. Since the 2^nd May 19 micron has risen 98 cents; 20 micron up 95 cents; and 21 microns up 87 cents. So cautiously, we look forward to an unchanged market when we sell next Wednesday with 1140 bales.

Ag Concepts Fwd Price Trades W/E 24 May, 2013

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

1038 cents é 16 cents compared with 17/05/2013                                 0.9648 ê 0.0233 compared with 17/05/2013

Northern Market Indicators (AUD cents/kg clean)

1054 cents é 17 cents compared with 17/05/2013

WEEKLY MARKET REPORT

Week Ending 17^th May, 2013

AWEX Northern Micron Indices Comparison

PHEW…ANOTHER GOOD RISE!

Last week’s rise was more than consolidated this week as another sub 40,000 bale national catalogue (the third in a row) and, finally, the exchange rate that is now under parity looks to have spurred buyers on to push the EMI 30 cents higher following on from last sale’s 26 cent rise. Early sales in the week on Wooltrade gave us a good lead that the market might record some good gains again this week. As was the case last week passed in lots from two weeks ago were snapped up at good increases from their passed in prices. Double digit rises across all micron categories in the three centres has medium indicators, from 19 to 23, all back above 1100 cents - even 24s are now at 1016! Sadly, however the finer indicators, although rising, are only just above these levels with 17 to 18.5s ranging from 1307 to 1209 cents. All three regional indicators rose 26 to 30 cents as rises were 25 to 55 cents for all fleece indicators.

This week’s offering of 34,600 was the smallest for 8 months and the third smallest for the season. The pass-in rate of just 2.5% on Thursday resulted in the best daily clearance for over 2 years with just 4% passed in for the week. All fleece types met with good competition as discounts for VM, colour, cott and tenderness shrunk to minimal levels, bar the super-fine lots that received good competition if the specs and style were right, but discounted if off style. The fall in the currency played its part as a 3.5 cent fall this week was the largest sale-on-sale fall since December 2011. It was pleasing to see several lots make over 1000 cents, something that has been missing for a while. The sad thing is though these lots were all under 17 micron where-as last year types out to 18.5 were making this money! This sector of the market certainly needs a boost.

Skirtings followed the fleece room lead as most types and descriptions added 20 to 30 cents with a definite emphasis on the 17 to 19 micron range up to 5% VM. The pleasing aspect of this sector is the low VM boosting prices and lack of cot and jowl in clips when compared to a year ago when nearly all clips carried these large discountable variables due to the wet summer of last year. Western clips would be carrying about half their normal VM levels, this due to no spring rain. Cardings had a negative sale as the opening day’s gains were lost on Thursday when locks and crutchings were unchanged as stains lost 10 cents to see the MCI lose just 2 cents. Crossbreds edged higher as 28 to 32 microns were up to 5 cents better as 25 to 27 microns added up to 20 cents.

Another good week and once again, without Viterra featuring in the top 10, as was the case last week. Techwool led the charge with 4100, Fox & Lillie 3400 and Modiano with Lempriere 2700 each as Qld Cotton not as active as they have been recently. The small quantities look set to continue as Fremantle are in a run of 1 day sales as the 2 centres on the Eastern Seaboard selling over two days for the foreseeable future with Fremantle not selling in sale 49 and 51, these week’s quantities anticipated to be well under 30,000 bales which should keep the pressure on buyers. This coupled with the best exchange in a year could auger well for the next few weeks. One can only hope this will be the case.

Sharpy returns from a two week hiatus in the USA next week. With the market going so well, one wonders if more time off could be had, just to keep the market plugging along! He might be under some pressure when he steps up to the rostrum next Thursday when we offer 815 bales. Let’s hope next week’s rain forecast is a bit more fair dinkum than this week’s droplets.           

Ag Concepts Fwd Price Trades W/E 17 May, 2013

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

1022 cents é 30 cents compared with 10/05/2013                                 0.9881 ê 0.0355 compared with 10/05/2013

Northern Market Indicators (AUD cents/kg clean)

1037 cents é 28 cents compared with 10/05/2013

WEEKLY MARKET REPORT

Week Ending 10^th May, 2013

AWEX Northern Micron Indices Comparison

PHEW…A RISE AT LAST!

It was with great relief that our expectations of a stronger market came to fruition. The late Thursday surge in Fremantle last week gave us an inkling that there could be a turnaround and seeing the Northern Indicator back above 1000 cents was very welcome. Even more promising was that it finished in the same tone as the previous week strengthening towards the end of the day yesterday.

Last week we had quite a few lots passed-in well below our pre sale valuation and we immediately listed these on Wooltrade. During the week, as the market rose each day, buyers began picking off lots that suited from the previous week with most lots making between 20 and 50 cents more than they were passed in for. As of today we have sold over 100 bales from last week’s sale on Wooltrade.

One factor which has had an impact is the declining size of the offerings which this week was just over 36,000 bales and forecasts for the next month are similar. The fleece offering in Sydney yesterday was the smallest in 12 months. The other interesting statistic this week is the small gap between 18 and 22 micron which is around 100 cents. The five year average is 366 cents demonstrating just how weak fine wool prices are.

Obviously yesterday we had a good clearance with all types having strong competition, yet the number one buyer Viterra was ominously quiet. They did not even feature in the top ten this week. Cardings remain the standout as the merino carding indicator pushed a further 25 cents higher.

Last week we reported from the AWI Broker Forum and how AWI are pursuing other opportunities for wool processing destinations as China has almost a monopoly yet, like the Japanese 20 years earlier, is beginning to show signs of increased costs and, would you believe it, looming labour shortages! It seems as the factory worker becomes more affluent and their lifestyle improves they seek better, higher paid employment in the cities. Great for consumption, but posing an issue for processing. We spoke last week about Vietnam, this week we’ll continue with Russia and Belarus/Ukraine.

“To Russia with Wool” is the campaign to rekindle the old one time major relationship with the Russian bloc. We remember them being major buyers of all our 22-24 micron wool. Every Russian soldier had two woolen army uniforms, and the end of the cold war spelt an end to that and their consumption of 33% of the Australian woolclip. Today Russia has a high standard of living and an emerging affluence with a high disposable income, a tax rate capped at 13%, free health and education and almost no home mortgages, and a cold climate. Whilst labour rates there are high, just over the border in Belarus and Ukraine there are very low labour costs and this is the target of AWI’s interests in getting wool back centre stage in Russia with their 200 million population. Late last year AWI led a party of major Australian wool exporters to Russia and Belarus to explore opportunities and begin a campaign aptly named “To Russia with Wool”.

The lower dollar spurred on by our interest rate cut should continue to help next week with Macwool offering a large 1700 bale catalogue on Wednesday.    

Ag Concepts Fwd Price Trades W/E 10 May, 2013

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

992 cents é 26 cents compared with 03/05/2013                                   1.0236 è 0.0000 compared with 03/05/2013

Northern Market Indicators (AUD cents/kg clean)

1009 cents é 33 cents compared with 03/05/2013

WEEKLY MARKET REPORT

Week Ending 3^rd May, 2013

AWEX Northern Micron Indices Comparison

HAVE WE REACHED THE BOTTOM YET?????

No confusion as to where the market was heading this week as the poor market in Fremantle last week swept east across the Nullabor quicker than the Indian Pacific on its return journey. All three centres recorded heavy losses on the opening day as all fleece indicators in Sydney collapsed to the tune of 40 to 55 cents. Some of the losses in Melbourne and Fremantle weren’t to the extent of those in Sydney but still in the 20 to 50 cent range. Discounts for colour, cott and tender increased to the point of almost total neglect for the worst lots as the pass-in rate climbed to 30% for the fleece sector. Thursday’s mood improved as some indicators made subtle gains on the Eastern seaboard with most back by another 10 cents as the two regional indicators lost 3 and 4 cents.  The only good news was to come out of the west as Fremantle’s indicator jumped 15 cents to 990 - now well ahead of the Sydney and Melbourne indicators of 976 and 959. All microns took a lift of 10 to 25 cents in the west - a great relief to finally see some sort of recovery in at least one centre. One buyer did comment to us that it was nearly impossible to sell a container into China and another was heard to say “there looks to be no end in sight” to the falling market??? These alarming comments hopefully can be put to bed with a market recovery that looked to have started in Fremantle yesterday. The closeness of the market can be seen in the gap between 18 and 21 microns - just 90 cents.

Skirtings tracked the fleece movements but, as we have said for weeks, haven’t suffered to the extent of the fleece sector. The opening day’s falls of 20 to 30 cents across all microns and VM levels was followed by more gentle falls on Thursday of around 10 cents with most emphasis on 18 micron and broader with 3% VM and higher. The very low prevalence of heavy cott and jowl and colour in skirtings this season (when compared to the selection of 12 months ago) is helping this sector hold its own when compared to fleece prices. In fact, one buyer did ask when heavier VM skirtings will hit the market. Our answer was: ‘when it rains enough to actually grow some clover, barley grass, and Bathurst burr etc!’ Cardings had a flat week as a small rise for locks on the opening day was negated by a slight fall late on Thursday, to leave the MCI unchanged at 721 cents. Crossbreds weren’t immune to the falling market, but fell the least of any sector. Fine types (25 & 26 microns) were unchanged as 28 and 32 micron fell up to 5 cents with 30 microns back 15 cents.

Please note our text below the 2 tables that Don has provided after attending a Woolbroker Forum convened by AWI in Sydney today. It makes for very interesting reading. The next three weeks have less than 40,000 bales/week nationally. Let’s hope this is enough to get the buyers into some sort of positive action. We sell first up next Thursday, but most would like to see, apart from a dearer market, at least 3 or 4 inches of rain to take much pressure off everyone.

                                                                                                                                                                                                                                                      Ag Concepts Fwd Price Trades W/E 3 May, 2013

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

966 cents ê 29 cents compared with 26/04/2013                                   1.0236 ê 0.0016 compared with 26/04/2013

Northern Market Indicators (AUD cents/kg clean)

976 cents ê 36 cents compared with 26/04/2013

AWI Woolbrokers Forum

AWI today held an information forum for Woolbrokers in Sydney which was well attended and represented by nearly all brokers across Australia.

The main interest naturally at the moment is focused on the short term health of the wool market which has, for the first time in over three years, seen the EMI slump well under the 1000 cent mark.

But whilst we were gathered they took the opportunity to enlighten us on most aspects of their current activities. Coincidentally, last night was the beginning of the Campaign for Wool promotion which began in the UK and promoted heavily by Prince Charles. The Strand Arcade between Pitt and George St has been filled with displays, garments from the Woolmark Awards and even two trees have been covered with knitted blankets. See our Facebook page for pictures taken last night.

AWI, with a relatively meagre advertising budget, has been targeting events and the recent Woolmark Awards held in London were a good example of gaining media leverage from events. For a cost of about $1.1 million it is estimated from editorial coverage in world media to have a value of approximately $27 million. To be able to have judges like Victoria Beckham donate their time was seen to be invaluable.

Probably the most interesting session today was the Off-farm research presentation by Jimmy Jackson. Whilst China has been the centre of attention over the last decade for both processing and consumption, AWI have begun targeted work in Vietnam and Russia/Belorussia and Ukraine.

Why Vietnam, well textile manufacturing already accounts for 21% of GDP. Vietnam has an abundant water supply which is vital not only for scouring but also dying and finishing.

In the last eighteen months AWI have been able to secure 35 partners in the textile chain and they are using their contacts in other wool processing countries that are looking for joint ventures etc. One of the challenges is that all the textile processing is either cotton or man made fibres. Wool is new to them but good ground is being made.

Vietnam looks like it will be the next growth area after China, already wages are rising in China and factory workers, as they become more affluent, are moving into other areas of employment. Another strong factor for textiles out of Vietnam is the Japanese market, which has historical issues with China and would rather not wear "made in China".

There is too much to cover everything today so will leave that for later, but unfortunately there was no great insight into what is going to happen to the wool market over the next week or three. Suffice to say the tip for next week is dearer! But not by much.

WEEKLY MARKET REPORT

Week Ending 26^th April, 2013

AWEX Northern Micron Indices Comparison

LEST WE FORGET

Confusion again reigned supreme as the opening day’s sale, held on Tuesday, finished with three different outcomes from the three selling centres. On the eastern seaboard Melbourne posted a modest 4 cent rise while the market is Sydney was unchanged as finer types under 19.5 rose up to 20 cents while 20s and broader slipped 5 to 10 cents. Fremantle’s market unfortunately couldn’t sustain any forward movements, with the two eastern markets falling late in the day, as 18 to 21 micron indicators gave up 5 to 20 cents - not a good sign for Wednesday’s markets. The downward trend spread through all three centres as widespread falls of 10 to 25 cents were the order of the day in Sydney and Melbourne. Worse was to happen in the west as falls in the order of 25 to 45 cents resulted in a pass in rate of 49 %.  After what was a reasonable start to the week, things went downhill suddenly to have the EMI slip under 1000 cents to 995 cents. Of the regional centres, Sydney and Fremantle still remain above 1000 now at 1012 and 1006 respectively with Melbourne at 984 cents. The worrying aspect was the 41 cent fall in Fremantle making the outlook for next week shaky at best. One bright note was that the 17 and 17.5 indicators did record subtle rises on the eastern seaboard as all other indicators fell 5 to 25 cents, with all microns in the west 40 to 60 cents cheaper.

Skirtings, although cheaper, weren’t punished as much as the fleece types. An opening days solid to sellers favour market across all types and microns, regardless of VM, somehow negated the final day’s losses to a certain extent. Lots containing less than 5% VM were quoted 10 cents lower with the higher VM types 15 cents off. This season’s selection of skirtings are benefitting from lower VM levels and far less cott, colour and jowl than was prevalent a year ago. This is reflected in the good prices for BKN from Coonamble, Trangie and Nymagee, realising low to mid 500 cents. Cardings rallied on both days to have the MCI gain 6 cents to 721 as stains and crutchings looked 10 cents dearer while locks on the finer side were quoted 5 cents higher. Crossbreds finished in negative territory for the sale as 28 and finer lost 10 to 15 cents while the 30 micron and broader types were just in buyers’ favour.

The up and down movement has everyone guessing as to which way the market will go, not only week to week but almost on a daily basis as was the case on Tuesday. The frantic buying of late last week is now a distant memory with a lower exchange rate and weekly quantities in the low 40,000 for the foreseeable future - not enough to stimulate the market in an upward trend any time soon according to some “experts”.  Techwool was this sale’s leading buyer topping the list at 4700 bales. Viterra  and Fox & Lillie were next with 3700 each and Lempriere purchasing 3200.

A milestone was reached this week as the Zegna wool awards celebrated their 50^th anniversary in Sydney. From small beginnings in Tasmania in 1963, this award is now highly sought after amongst super-fine woolgrowers across the country. Third generation wool growers from Mudgee, Andrew and Penny Hundy won 1^st prize, and took home the prestigious Vellus Aureum Trophy for the finest fleece, 11.3 micron. Zegna chairman Paolo Zegna, also a 3^rd generation participant in the production of high end fashion from super-fine wool was proud to chalk up 50 years of these awards and looked forward to another 50 years of involvement. Just 41,000 bales are rostered for next week, as a dearer market would be a good result.

Ag Concepts Fwd Price Trades W/E 26 April, 2013

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

995 cents ê 10 cents compared with 19/04/2013                                   1.0252 ê 0.0045 compared with 19/04/2013

Northern Market Indicators (AUD cents/kg clean)

1012 cents ê 12 cents compared with 19/04/2013

WEEKLY MARKET REPORT

Week Ending 19^th April, 2013

AWEX Northern Micron Indices Comparison

A DEARER MARKET – BUT ONLY JUST

The opening day of this week’s sale had everyone confused. After the last day recovery in Fremantle last Thursday, thoughts of a market comeback this week were quickly dashed as all indicators lost up to 20 cents on Tuesday in Melbourne. The first sign of a turn-around was on Wednesday as Melbourne firmed up, posting a 3 cent rise. Sydney and Fremantle recorded reluctant falls, but the sentiment was more positive than earlier in the week. Thursday exploded into action as all three centres shrugged off the negativity of the previous sale and made good gains to the tune of 65 cents for 16.5s in Sydney. We also had evidence of a recovery on Wednesday as sales on Wooltrade started, the first sales on the internet system for 7 weeks. By Thursday afternoon we had 40 bales sold and buyers ringing up trying to buy passed-in lots from not only this sale but from last week’s catalogue as well. How things can change so quickly! One factor not mentioned last week that could have contributed to the big fall was that orders for uniforms in China (be it factory or office workers or even the army) had dried up. Also, a few alarm bells rang when their economic growth had shrunk to a lowly 6% in the March quarter when compared to the 8% growth in the December quarter. What the EU or the USA wouldn’t give for a growth figure half that size! Adding to the shaky confidence aspect for the market would be the bombings in Boston and the massive factory explosion in Texas, certainly a tough week in the States. By the final lot sold on Thursday all indicators in the three centres (bar fine types <17 micron) had added 10 to 25 cents from last week’s levels. Finer indicators posted healthy gains of 40 to 70 cents. Pass in rates fell to just 7% on Thursday with the weekly figure down to 9% - a drop of over 16% from last week’s disaster. This sale was the first since early March in which the EMI had recorded any upward movement, 6 cents to 1005. Wednesday’s modest gain in Melbourne broke the longest run of falls (12 consecutive selling days) that the EMI had experienced since AWEX’s inception in 1995. The fall amounted to 127 cents, 11.4%. Following last sale’s collapse, the withdrawn figure blew out to 11%, the largest for over 4 years, sending a clear message that there is grower resistance to the EMI dropping under 1000 cents.

Skirtings started the sale on a sour note with initial losses totaling up to 30 cents. The mood changed rapidly on Thursday to see all types and VM levels across all microns adding 20 cents to their overnight values to finish the sale just off their opening quotes. Cardings mirrored the movements of skirtings after opening the sale with 5 to 15 cent falls only to recover these losses in full on the final day to have the MCI unchanged at 715 cents. Crossbreds were the quietest sector of the week posting subtle rises of up to 5 cents.

What a difference day makes. From doom and gloom last week, to almost dare we say, panic buying by Thursday. A sudden drop in the exchange rate to under 103 cents this morning from over 105 cents a week ago looks to have helped write some new business. The forecast for national offerings looks to be tapering off as the weekly catalogue will only average 45,000 bales over the next 3 weeks. These factors will be taken into consideration by mills as we move into the quieter recevial period of Winter for some brokers. On the other hand nothing has changed for the Chinese regarding the economic problems in Europe and the USA, tension on the Korean peninsular or their own economic slowdown. Next week we will offer 960 bales on Wednesday with at the very least a solid market for all concerned.

                                                                                Ag Concepts Fwd Price Trades W/E 19 April, 2013

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

1005 cents é  6 cents compared with 12/04/2013                                      1.0297 ê 0.0223 compared with 12/04/2013

Northern Market Indicators (AUD cents/kg clean)

1024 cents é 10 cents compared with 12/04/2013

WEEKLY MARKET REPORT

Week Ending 28^th March 2013

AWEX Northern Micron Indices Comparison

WE NEVER SAW THIS COMING!

If this week’s wool sale was a game of football the score would read something like this: Woolbuyers 60 or 70 - Woolbrokers 6. Yes, worse than the 50 to nil performance Parramatta put up against the Roosters a few weeks ago! Why did we give 6 points to the brokers you ask? Fremantle somehow dragged itself off the canvas on Thursday to record an 8 cent rise after free falling 64 cents on Wednesday. This large fall was the biggest daily drop in any centre for over 2 years. Their pass in rate of 50.4 % was the largest in that centre for over 10 years. Talk of a softer market filtered through on Friday and, based on the information given, we had a bit of a stab in the dark issuing appraisals. Melbourne opened the sales on Tuesday with falls across the board of 25 to 45 cents - this being in the range that was anticipated last week. Wednesday saw the market in free-fall as the losses ranged from 45 to 70 cents in Sydney up to 100 cents for 22s in the West. As said before, Fremantle did post gains on Thursday with the Eastern centres’ falls far less than the previous day (15 to 30 cents), but the damage had been well and truly done on Wednesday. By the end of the sale losses in the fleece sector ranged from 45 to 80 cents across the three centres. The EMI lost 60 cents now down to 999 cents, the lowest point since November last year. The regional indicators each lost between 55 and 70 cents with Fremantle having the highest regional indicator at 1030 cents. The national pass-in rate was 26%, with the Fremantle figure at a staggering 41%, with 42% of all fleece wool on offer on Wednesday passed in. This is not such a bad thing as this sends a definite signal to China that there is grower resistance to these levels. It will be interesting to see how much wool is withdrawn from catalogues over the next few sales.

Room 2 was not immune to the big losses suffered in the fleece room. Steady falls throughout the sale had skirtings 80 to 90 cents lower than pre Easter levels. Finer types >19 micron and heavy VM lots <12% fared worse with falls in the 100 to 130 cent range. Cardings recorded greater losses on the Eastern Seaboard than in the west. All types and descriptions were quoted 30 to 45 cents lower, with the MCI 35 cents back in Sydney compared to just a 10 cent fall in Fremantle. Crossbreds didn’t escape the carnage either, as all indicators recorded double digit losses. The finer end, 26 to 28s came off 25 to 35 cents while the broader types were less affected, giving up 15 to 20 cents.

A disastrous start to sales in the run through to the end of June. No-one saw this collapse coming, but a rising exchange rate (now higher than 105 US cents), concern over Europe’s climbing unemployment rate (now above 11% - the highest since the GFC started), and the debt crisis in Cyprus that has Banks in Europe nervous about the prospect of another bail-out (which none of them want to be caught up in), are all factors weighing heavily on the market’s ability to move higher. The tense situation on the Korean peninsular has Western governments in particular nervous about the next move the North will take. All this points to a lack of confidence. Confidence is a great thing which all markets need, but at the moment confidence is scarce, demand is quiet so China is quite happy to see the market retreat to a level they are happy with. Don’t despair, the market spent between early August to mid October and 2 weeks in November under 1000 cents, dropping as low as 927 cents. Let’s hope the market steadies next week on the back of Fremantle’s minor recovery on Thursday. We sell 1^st up on Wednesday, offering 585 bales.

Ag Concepts Fwd Price Trades W/E 12 April, 2013

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

999 cents ê 60 cents compared with 28/03/2013                                   1.0520 é 0.0054 compared with 28/03/2013

Northern Market Indicators (AUD cents/kg clean)

1014 cents ê 68 cents compared with 28/03/2013