WEEKLY MARKET REPORT

Week Ending 10^th August, 2012

Northern Micron Indices Comparison: Source of information: AWEX

A DISASTROUS START

The annual three week winter recess may have given brokers and buyers time to catch their breath and catch up on work that gets put to one side and for many buyers have those long overdue face to face meetings with agents or clients overseas and prepare for the run through to the end or the year, or in some cases just take a bit of time out from the rigors of week-in week-out wool sales. Whatever we all did, didn’t work! Talk of the market opening on a softer note as early as last week rang true. A national catalogue of 50,000 bales had been amassed over the recess, not overly large by anyone’s ideas of “too much wool”. A 4 cent rise in the exchange rate certainly wasn’t going to help the market with the AUD$ at a tick over 106 US cents. The EMI collapsed by 67 cents to sit under that psychological number of 1000 cents now at 995. From the outset the market retreated in free-fall with big losses recorded on the opening two days. Thursday saw the market steady as some of the better style lots (finer than 18.5 micron) firmed up to 10 cents higher. This, however, was of little comfort as the falls were across the board with 18 and 18.5 losing an average of 30 cents with all other indicators toppling by 50 to 80 cents. With the big fall also came a big pass-in rate - 22% nationally - with fleece wool in Fremantle and skirtings in Melbourne, clearing just 71.5%. Discounts were back in vogue for all faults as lines with colour, cott and high levels of VM copped a hammering. The discount between 1 and 2% of VM is around 40 cents clean, this is normally around 10 cents when the market is going well.

Skirtings failed to escape the carnage as well with big reductions from the outset. By week’s end prices had slumped to the tune of 60 to 80 cents for most types and descriptions with price falls reducing on Thursday. There are still some clips carrying cott and jowl in their pieces which, in some cases, are attracting token bids. It is still necessary to remove these faults from your line of BKN if you can to soften the blow of the discount. Cardings weren’t immune to price reductions as the MCI fell 49 cents in Sydney to 561 cents. This amounted to losses of 50 to 80 cents for all types and descriptions across the sector. Crossbreds took a hit as well due to the unfavourable exchange rate. Finer types from 26 to 30 micron gave up an average of 60 cents while the 32 micron indicator was down by 40 cents.

A shocking sale to begin after the recess. The big problem is still a lack of demand from Europe and an increasing amount of ‘Tops” in China. There is no real quantity of greasy wool in China, but on-selling tops and combed wool is becoming harder and harder. Clients who took a futures contract are now looking at a 100 cent gain on wool to be sold over the next month or so. We can only hope the market will settle over the next few weeks as quantities will settle around 40,000/ week. Hopefully Chinese attention moves from the Olympics to buying wool.

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

                Eastern 995 cents ê 67 cents compared with 12/07/12                                 1.0609 é 0.0421 compared with 12/07/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1007 cents ê 62 cents compared with 12/07/12

WEEKLY MARKET REPORT

Week Ending 13^th July, 2012

Northern Micron Indices Comparison: Source of information: AWEX

A DISAPPOINTING END

A tough sale this week as the market retreated on both selling days in all three centres. Fremantle was back on line this week as a total of 48,000 bales were to be auctioned - the largest national catalogue in 12 weeks. Buyers became spooked at the big offering and cries of “too much wool” etc was all the talk on the show-floor early in the week. There was no talk of the three week recess pushing buyers to look for wool or buying enough stock to see them through this mid-year break. A look back at the Sale 1 and 2 national offerings last year saw 98,000 bales on offer. These past two sales saw 80,000 bales for sale, so how could this be ‘too much wool” or “not orderly marketing” or any other excuse that is trotted out when the national weekly catalogue approaches 50,000 bales? The only sector of the market to remain relatively unscathed was the super-fine microns of 17 and lower, finishing up to 10 cents better. 17.5 to 18.5 and 21 and 22 micron indicators gave up 20 to 30 cents with 19 to 20 getting caned by 40 to 55 cents. Discounts for faults, (tender/colour/cott) expanded again as did the differential for lots with 2% VM when compared to FNF types - the  margin around the 30 to 40 cent clean range, regardless of micron or style. A large portion of our fleece lots, 66%, were between 19 and 21 micron and made 1150 to 1200 cents clean. Only a 10 cent gap now exists between 19.5 and 23 micron-1199 to1189- the closest in 9 years with 18.5 microns at 1275 cents, just 86 cents better than 23s.

Skirtings softened as the sale progressed, but not to the extent of the fleece room. Better specified lots in the finer micron ranges with under 5% VM  opened the week unchanged and held their values to the final lots sold with lower style types containing 8% VM or higher finished off the pace by around 20 to 25 cents. Cardings added 2 cents to the MCI to sit at 610 cents on the back of crutchings and stains remaining solid and locks tending sellers’ favour. Crossbreds also recorded little movement with both days quoted as unchanged as the 30 micron indicator was increased by 2 cents. One indicator movement of note was the 26 micron in Melbourne enjoying a 14 cent lift.

A disappointing end to sales as most traders will have a hard time booking up wool over this 3 week recess on the back of a falling market. There will no doubt be a build-up of quantity over this period and a wait-and-see approach by most buyers will be the most likely outcome when sales resume on Tuesday, 7^th August. National weekly quantities last August averaged 46,000 bales, this figure a bit above what is anticipated this year. The EMI finished at 1062 cents, 299 cents behind the level of a year ago (22%). Hopefully buyers can see the bigger picture of a reduced volume of wool coming onto the market over the long-term rather than bigger quantities in the short term when sales resume in three weeks. Our next report will be on 10^th August; this may be the start of a rough ride for the market through the spring.          

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

                Eastern 1062 cents ê 15 cents compared with 05/07/12                       1.0188 ê 0.0073 compared with 05/07/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1069 cents ê 20 cents compared with 05/07/12

WEEKLY MARKET REPORT

Week Ending 6^th July, 2012

Northern Micron Indices Comparison: Source of information: AWEX

OFF TO A STEADY START

The opening sale of the new season saw a cautious and steady tone as the EMI added just 1 cent to last week’s end of season close of 1076 cents. The rise came as a result of Melbourne lifting by 2 cents and Sydney remaining unchanged. The pattern of market movements was identical on both days as finer types, 17.5 and under, and broader indicators from 22 out edged higher to the tune of 5 to 10 cents - the fine microns benefitting from a handy selection of Goulburn stored wool. All other indicators, 18 to 21 drifted lower by as much as 10 cents, due mainly to a sub-standard selection on the opening day. One factor weighing heavily on the market is the discount for VM. Fleece wools with 2 to 3 % VM in the 20 micron range are attracting a discount of 65 cents clean from the 1% VM lots and a discount of 85 cents in 21 micron types. When the market is firing we have seen these discounts shrink to as little as 20 to 30 cents, which is about normal (the old rule of thumb was a 10 cent discount for every 1% of VM). Strangely enough, as the VM levels increased the discounts did indeed reduce as some lots carrying 7 to 8% VM were only 30 cents cheaper than the lots with 3% burr. Also notable was, dare we say, a style premium. Two lots at 19.7-1.3vm-40+nkt’s were 20 cents clean different, one from Goolma the other from Louth. The lot from Louth did have a mid-break of 63 compared to 36. Could this have been the difference? The Louth clip did have another 19.7 lot, 0.9 VM, 30 nkt with a mid-break of 71 make 15 cents clean more than his other lot, both purchased by the same exporter! Hard to follow this price determination. Most growers (just the two centres on the Eastern seaboard operating) appeared keen to sell as the clearance rate of 94% was the highest in 16 months. In fact we sold every lot offered - just the third time Macwool has achieved a 100% clearance.

Skirtings followed the pattern of the past two weeks as both days saw subtle increases in the market. Good length finer than 18 micron types added 20 to 30 cents regardless of VM, while 19 to 21 micron skirtings looked to be 10 cents higher than the previous sale’s quote. With the market on the rise we have been able to clear passed- in lots at good increases with some better than their original valuation. The effects of the wet summer have all but gone with less and less cott and jowl in the skirtings. Cardings were left unchanged for the week and fine Crossbreds edged higher by up to 5 cents while the broader types (30 micron up) lost the same amount.

Next week sees all three centres selling before the annual three week winter recess. A national catalogue of 49,000 bales may test the market as Macwool creates history with our largest catalogue to date, 2190 bales, 1^st up on Thursday.   

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

                Eastern 1077 cents é 1 cents compared with 28/06/12                         1.0261 é 0.0141 compared with 28/06/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1089 cents é 0 cents compared with 28/06/12

  WEEKLY MARKET REPORT

Week Ending 22^nd June, 2012

 Northern Micron Indices Comparison: Source of information: AWEX

OFF THE BOTTOM

As a few key staff sat quietly discussing the markets woes over some beers at the South Dubbo Tavern last Friday night, both mobile phones went off with text messages reporting 20 bales sold on Wooltrade. Could this be the bottom of the market? Is the market on the way back up? We had not made a sale on Wooltrade for weeks and talk of the market being at the bottom was pretty common on the showfloor. Could the A$ climbing above parity stall any rise (at one stage over 102US cents)? Would the better style offering entice buyers to push a little harder? These questions were answered on Wednesday which saw a moderate lift as most indicators posted single digit rises. Thursday saw renewed competition as all microns (bar 21 and 22s) recorded rises of 15 to 30 cents. Even with only a lift of 15 cents in the AWEX EMI to 1069 this sudden change of sentiment was long overdue but very welcome. The extended run of losses that was broken this week came on the back of the smallest offering in 3 years - just 21,500 bales. This week’s rise was the first since early May. The lift in the market saw pass-in rates shrink to just 5% in Sydney and 7% in Melbourne, the smallest in 10 months. Passed in lots from previous weeks did benefit as discounts seemed to be lighter than what was in place recently.

Skirtings followed the fleece room lead as all descriptions bar the heavily infested lots with colour, cott and jowl saw vigorous competition push most types 25 to 40 cents higher with the better style and length lots (finer than 19.5 micron and under 5% VM) attracting most of the buyer attention. The selection has improved over the past month or so, but there is still a portion suffering from the wet weather earlier in the year and still being discounted savagely or almost neglected. The pass in rate for skirtings was double that of the fleece room. Cardings had an up and down sale as a static market on the opening day, except crutching’s in buyers favour, gained momentum on Thursday to lift the MCI by only 1 cent to 601 cents as locks lifted by up to 5 cents  with all other descriptions quoted as fully firm. Crossbreds took a day to get moving as well. After remaining unchanged on Wednesday, buyers ramped up competition on Thursday as 28 micron and broader rose by 10 to 15 cents.

Any time the market rises is a good week but in light of the market’s performance since early May this little lift comes with a sense of relief. To see the market bottom out is good, but as reported in yesterday’s “The Land” the market could still struggle through till Christmas with plenty of movement more-so on the down-side unfortunately as the problems in Europe won’t be fixed overnight. Viterra Wool led the charge this week buying 14%, 3000 bales, followed by Techwool, 9% and Lempriere 8%. What a difference a year makes! 12 months ago the market was at its peak, the EMI at a lofty 1436 cents, this week a massive 367 cents lower at 1069, a 25% fall. A look at 2 years ago sees a 60% lift to this time last year, 899 to 1436 cents so we are somewhere in the middle at the moment. Whispers of a solid market for next week would be another good result.                

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

                Eastern 1069 cents é 15 cents compared with 15/06/12                      1.0166 é 0.0200 compared with 15/06/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1085 cents é 15 cents compared with 15/06/12

  WEEKLY MARKET REPORT

Week Ending 15^th June, 2012

Northern Micron Indices Comparison: Source of information: AWEX

STATUS QUO

The market’s relentless march southward continued unabated this week as most micron indicators recorded a double digit fall over both selling days. Doom and gloom looks to have gripped the buying trade as business has slowed to a trickle and the light at the end of the tunnel is becoming dimmer and dimmer all the time. This week’s 25 cent fall in the AWEX EMI to 1054 has now extended the run of consecutive day’s falls to 12 - the longest losing streak in nearly ten years. With Fremantle losing 30 cents this week to 1082 all regional indicators as well as the EMI (both AWEX and in US cent terms) are now all under 1100 cents. The high pass-in rate over the past six weeks (May having the highest monthly passed in rate since AWEX took over market reporting 20 years ago) also has lead to the % of re-offered lots climbing to new levels, this week making up 17% of the total offering - the highest in 2 years.  Even with a little support for the low VM types early on the opening day and improved interest for better style lots late on Thursday (when we sold) the market lost ground with the 17 micron and finer indicators taking the brunt of the losses to the tune of 60 cents and higher with 17s now under 1400 cents for the first time in 20 months. All other indicators retreated by 20 to 40 cents with types containing colour and cott attracting larger discounts. The ultra-fine sector of the market seems to be in recovery as we reported a few weeks ago. The Wool Factory from Horsham in Victoria sold 3 lots this week with 1 bale, certified 1PP, (11.6-0.1-74.6, 69mm-39nkt) making a second highest seasonal price of 20,600 cents bought by Lempriere Australia. Two other bales of theirs (a 12 micron and 12.6 micron) made 15,000 and 9000 cents respectively. Talking to the Lempriere buyer in Melbourne, none of these bales have yet been sold to mills or processors, rather better to take a wait and see approach till demand improves and sell at a profit rather than take a huge loss. These ‘special’ bales could be in “stock” for up to 18 months before a sale is made!

Skirtings continued in the same vein as fleece types with burry lots giving up 30 to 40 cents. The better style and low VM types did see somewhat of a late rally on Thursday edging in sellers’ favour. It looks as though the volume of lots infested with heavy cott, colour and jowl seems to be less and less thus discounting is not as savage as a few sales ago. Cardings took another hit as big falls on the opening day were negated by a solid to sellers’ market on Thursday. Locks finished the sale 35 cents off the pace as crutchings were 20 cheaper and stains 10 cents lower to have the MCI down to 600 cents. Crossbreds had a mixed week as a dearer market in Melbourne (up to 10 higher) saw prices in Sydney ease by up 5 cents.

With the falling market some growers have taken the opportunity to lock in portions of their clip. To date all forward prices locked in range from 1235 to 1260 cents, a 10 to 40 cent premium already. If considering locking some in don’t hesitate to contact us as forwards now have dipped below 1200 cents. Talk of the market at its bottom is hopefully right for next week.  

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

                Eastern 1054 cents ê 25 cents compared with 08/06/12                       0.9966 é 0.0014 compared with 08/06/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1070 cents ê 31 cents compared with 08/06/12

WEEKLY MARKET REPORT

Week Ending 8^th June, 2012

 Northern Micron Indices Comparison: Source of information: AWEX

STILL FALLING

We thought we were close to the bottom last week, but alas we are even closer. A softer tone to the start of this sale has every-one wondering just where is the lowest point of the market and when will it be reached? The smallest national offering in 12 months, 27,000 bales, and an exchange rate under parity with the $US and even another interest rate cut  have well and truly failed to put the brakes on this market’s retreat. Sure the falls in the market have slowed to a canter, rather than a gallop, but still a fall is a fall and nothing according to buyers and traders points to a positive outlook either soon or later as business is almost impossible to book up at the moment and mills are now scrutinizing every bale with a fine tooth comb before it hits the scour and are claiming for any abnormality they can find. The EMI has now recorded falls over the past 10 consecutive selling days equaling a similar run of losses last Sept/Oct. Discounts for VM continue to grow as a line with 5.2% VM attracted a 170 cent discount from an FNF type whereas low VM lots under 2% look to have softened their discounts somewhat. Once again the finer microns took the brunt of the falls as 17.5 and lower fell 25 to 40 cents (with some lots up to 100 cents off) as little competition on these types is allowing China to let them free-fall to levels unfortunately not yet reached. As reported last week the ultra-fine market seems to be making some sort of a recovery as 2 bales of 12.1 micron made 12,000 cents and a 12.7 micron bale  reaching 9,000 in Melbourne. 18 to 23 microns recorded falls of 5 to 15 cents, in line with last week’s reductions. The 19 to 21 micron differential is at its narrowest since 2003, just 35 cents, with 18 to 23 micron only a 110 cent gap. This week 12 months ago these gaps were 269 cents and 764 cents. How things can change!

Skirtings also suffered under the weight of a non-committal market-place. Most types finer than 19 micron ranging from 3 to 6% VM finished the sale 20 to 30 cents down while the heavier VM lots gave up 20 cents late on the second day. The only types to escape any discounts were the better style light burr lots. Discounts for cott and colour again look to be softer as freer types of these faults come onto the market allowing more blending to take place between the “good and bad” lots. It was a mixed week for the cardings as locks finished the week unchanged as stains were in sellers’ favour and crutchings quoted at 10 cents off last sale’s prices. The MCI lost 3 cents to sit at 626 cents. Crossbreds had a mixed week as 26, 30 and 32 microns remained solid but 28s fell 10 cents.

Just three sales remain now till the end of the season and nothing indicates any sort of recovery in the market. Next week all three centres are back on line with Macwool selling next Thursday. For growers in the Western Division the Louth Field Day will be held tomorrow, Saturday, 9^th June. Don and Sharpy will be attending and look forward to catching up with everyone.      

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

                Eastern 1079 cents ê 17 cents compared with 01/06/12                       0.9952 é 0.0237 compared with 01/06/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1101 cents ê 17 cents compared with 01/06/12

 WEEKLY MARKET REPORT

 Week Ending 1^st June, 2012

  Northern Micron Indices Comparison: Source of information: AWEX

CLOSE TO THE BOTTOM???

Better news this week as the falling market slowed to a crawl rather than the free-fall that it was over the past three weeks. The 66 cent fall over this period  trickled to just an 8 cent reduction in the EMI now down to 1096 cents, the first time the EMI has dropped below 1100 cents since December, 2010. Most of the falls occurred on the opening day as buyers seemed a bit keener on Thursday and some types in the 20 and 21 micron range a little harder to buy late in the day. Most indicators lost 10 to 15 cents with 16.5 down 40 cents and 17.5s giving up 25 cents. The corresponding finer types in Melbourne were hit harder as 17s and finer lost 50 to 85 cents. There was some bright news in the ultra-fine sector as the Wool Factory at Horsham offered lots with one fetching over 10,000 cents. A 1PP lot measuring 12.6 micron made 9,500 cents while a 12.3 lot made 11,700 and one lot of 12.8 passed in for 7,300 cents. This is a doubling in price for these types compared to prices in the spring - let’s hope all other indicators can follow their lead! Even with the market, dare we say, nearly at the bottom, C fault fleece wools (4 to 8 % VM) with a bit of colour and soft cott are now losing touch completely with the indicators as discounts now at around 200 cents, nearly doubling in the last three weeks. With the quality of the offering improving slowly, hopefully these discounts will revert to a more normal level.

The slide in the skirtings came to a halt as well. Keener competition saw most types open the sale unchanged with just the odd lower style lot off the pace. This pattern continued in the same vein on Thursday as all descriptions were quoted as fully firm with some of the better length and lower VM lots dearer. Discounts for cot and colour didn’t look as severe as in previous weeks as only a lot of pieces and one lot of stains were passed in. Cardings started the sale unchanged when compared to last week but were unable to sustain this level as locks eased 5 cents and stains fell 10 cents to have the MCI lose 5 cents this week. The crossbred sector out-performed all others as a solid opening day led to good rises on Thursday. 28 to 30 micron ranges gained 10 to 15 cents while the 32 micron and broader looked 5 cents better as we cleared 100% of our XBs.

Sentiment may not have changed much but the market performed much better than anyone would have guessed. Although booking up containers is still hard work according to all buyers and traders, the lack of quantity over the next three weeks, averaging 29,000 bales, the $AUD under pressure, and an improving quality of offerings, things might take a turn for the better. On the down-side however is the worry over the EU outlook with Greece on its knees and now most Spanish Banks in critical trouble just to add to the regions woes, knocking any hint of consumer confidence for six as caution and belt-tightening is the name of the game. Only the two centres on the Eastern seaboard selling next week with just 28,000 bales on offer with Macwool selling early on Wednesday with a catalogue of 600 bales. Here’s to a stable market and more rain.      

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

                Eastern 1096 cents ê 8 cents compared with 24/05/12                 0.9715 ê 0.0039 compared with 24/05/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1118 cents ê 5 cents compared with 24/05/12

        WEEKLY MARKET REPORT

               Week Ending 25^th May, 2012

        Northern Micron Indices Comparison: Source of information: AWEX

FROM BAD TO WORSE

It seems that nothing can stop the market from retreating as all three centres recorded double digit losses again this week. The EMI lost another 17 cents to sit at just 1111 cents. Despite the second smallest offering of the season - 33,000 bales - and the exchange rate at its lowest in over six months (around 97 US cents) the market can do nothing but fall. Concerns over a Greek default and global worry about the remaining EU countries remaining viable in the short term and their ability to trade their way out of recession and not go broke propping up their European counter-parts is dramatically affecting confidence in the market. Caution is the name of the game as buyers and traders nervously book up wool at a snails pace almost insisting that the wool is virtually sold on the end of the pipe-line before buying in the auction room. Most micron indicators from 17 to 21 peeled off 15 to 30 cents with the low mid-breaks and FNF types least affected, dropping 10 cents. The pattern for lots with colour, cott and burr was the same as previous sales, discounting by bigger margins as the weeks go by. Some good news for finer and broader types, + 16 cents in Melbourne for 16.5 and a 10 cent gain for 23 and 24s. Even with this subtle movement in the finer microns, this sector of the market has lost dramatic ground over the past 12 months. 17 microns have lost 900 cents (37%) while 23s fell by only 16 cents (1%) closing the gap between the two to less than 300 cents - the smallest differential since 2003. An even closer gap is the 18 to 21 micron range now just 88 cents, compared to a 670 cent gap this sale 12 months ago. Incredible numbers by anyone’s reckoning.   

Merino skirtings took another hammering this week as heavy discounting continued unabated for types carrying cott, colour and heavy seed. Best types in the lower micron ranges with good specs and low VM escaped the price carnage, but heavier VM types also attracted big discounts. Most price falls were in the 30 cent range with some finer high VM lots up to 50 cents down, on the opening day with an irregular but generally unchanged market on the final day with some light VM types in sellers’ favour. Some pieces and bellies in the middle micron range with medium VM carrying a little cott and colour are not making much more than good locks and crutching’s. Oddments tumbled this week as well with the MCI falling 24 cents. Lock lost an opening day’s gain of 5 cents on the final day while stains and crutchings lost value as the week progressed down by 30 to 40 cents. Crossbreds also suffered losses on both days ending the sale 10 to 20 cents cheaper.

With the market taking a backward step so to are forward prices. Futures for July to September are about 50 cents lower than the present day physical market. With this in mind and the way the market has been tracking, locking in a portion of the clip at prices just under current levels may be worthwhile. Talk for market direction after the three week winter recess in July is not in the positive at all with more price reductions likely according to buyers and traders. If you want any more information please don’t hesitate to contact us at the office or your rep on their mobile numbers. A larger national offering of 40,000 bales will not help the market under these circumstances, Macwool sells on Thursday with 1160 bales up for grabs. At least the rain we needed came in the nick of time to most of our clients except in the far west.

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

                Eastern 1104 cents ê 17 cents compared with 18/05/12                   0.9754 ê 0.0188 compared with 18/05/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1123 cents ê 21 cents compared with 18/05/12

        WEEKLY MARKET REPORT

               Week Ending 18^th May, 2012

        Northern Micron Indices Comparison: Source of information: AWEX

                                                                                                                                                                                                                                                FROM BAD TO WORSE

The hopes of a stable market didn’t come to fruition as falls from the opening lots through to the final catalogue on Thursday were the order of the day. Big falls on the opening day were followed by a steadier, although cheaper market on the last day. It seems that too many external factors are weighing heavily on the market. Even the exchange rate that is now under parity, for the first time since December 2011 hasn’t helped and, if in the low 90s, may not be a factor to entice buyers. The ongoing political unrest in Europe, (especially in Greece with another round of elections in June, and the economic problems most EU countries are going through and finding it difficult to get out of) has had a detrimental effect on confidence and demand.  The slowing Chinese economy is also a worry as the necessity to purchase wool has steadied, even with the “pipe-line” empty. Finer micron indicators took the biggest hits as 18 and lower gave up 65 cents and more on the opening day, but did steady somewhat with all but 18s (-10 cents) unchanged on the final day due to a better selection. 18.5s lost 53 cents for the week while the medium indicators of 19 to 22 fell 18 to 30 cents with the broad merino types retreating 10 to 15 cents. Last week’s pattern continued on as the FNF types (although cheaper) were in most demand with the burrier lots with cott and colour being punished again with ever increasing discounts. 30 % of all fleece wool offered nationally was passed in on Wednesday, the highest for well over 12 months.

Skirtings mirrored the fleece movements as buyers savaged anything with any hint of cot, colour or jowl. A reduction of 30 cents was the order of the day as 6% VM and greater took the brunt of the falls. Thursday saw a reduced fall in the market as most of the falls were around 20 cents with some of the better length and good colour lots finding some limited support.  Cardings again lost ground as the MCI was reduced by 24 cents to sit at 658 cents.  Locks were reduced by 20 cents as crutchings retreated by 30 cents and stains fell by another 40 cents. Crossbreds escaped the week virtually unscathed as most types and descriptions quoted up to 10 cents cheaper.

A tough week by anyone’s reckoning as trading became very difficult and a wait and see approach is the order of the day for most exporters. Many re-offered lots from Sale 42 failed to sell as bids were well below the passed in price of four weeks ago. The overall passed in rate nationally was 23% - the highest since April last year. The opening day’s fall of 24 cents of the EMI was the largest single-day fall in 9 months and just to compound the bad figures the EMI at 1131 cents is at its lowest point since January 2011, before the market took off on a 5 month “bull-run”. In some good news Macwool was the largest seller in Sydney this week with a catalogue of 2110 bales consisting of 419 lots of which 366 were sold which represents a passed in rate of 13%. Fremantle held its first of a series of 1 day sales this week offering just 7,500 bales with a massive 41% passed in! Even with less than 35,000 bales on offer next week, hopes of a solid market look as far off as a good fall of rain. Macwool sells next Wednesday with 1065 bales catalogued. Good luck!

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

                Eastern 1121 cents ê 34 cents compared with 11/05/12                        0.9942 ê 0.0168 compared with 11/05/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1144 cents ê 38 cents compared with 11/05/12

        WEEKLY MARKET REPORT

                           Week Ending 11^th May, 2012

        Northern Micron Indices Comparison: Source of information: AWEX

SMALL CATALOGUE, LOWER DOLLAR BUT MARKET STALLS

Momentum, or the very little we had, ground to a halt this week as the market was unable to sustain the slight rises of the past fortnight. Despite the smallest national catalogue of the season (33,000 offered with just 28,000 sold) and the AUD$ dropping to parity, the market drifted to have the EMI losing 15 cents to 1155. This was the smallest offering since the end of June last year with the May/June period last year averaging only 32,000 bales a week, with this year’s figures expected to be even lower for the corresponding period. All indicators were in the negative on the Eastern seaboard. Sydney recorded minimal losses with most under 10 cents, except 18 and 19 micron down 11 and 19 cents respectively. Melbourne’s losses were heavier - 20 to 30 cents for 18 and finer and 15 to 20 cent falls for 18.5 to 22s. Their broader types varied greatly - 23 and 24s lost 5 to 10 cents with 25 up 7 and 26 micron posting a massive 44 cent rise to 918 cents. A great price for this indicator. The lacklustre fine wool price is hard to ignore as the gap between 18.5 and 22 micron is only 120 cents. The large proportion of burry lots carrying some colour and cott are attracting bigger and bigger discounts as the FNF types held their ground. This week looked as though the discount for any VM started at 1% as the threshold over the past few sales was around 1.5 to 2% before any real discount was noticeable. Lots with low Nkts and high mid-breaks were also harshly punished.

Merino skirtings continued their downward trend as low VM types under 6% opened 10 to 20 cents lower in the 18 to 20 micron range. There was no real change to this pattern on the final selling day as some fine micron lots lost another 10 cents with lots carrying cott and colour again attracting bigger discounts than previous sales. Only the good to best style low VM lots looked a touch dearer by the end of the sale. Cardings again lost value with the MCI down by 12 cents. Locks remained the same as a last day rally of 10 cents negated the opening day’s fall of the same amount. Crutchings quotes were unchanged for the week, but it was the stains influencing the indicator fall as they couldn’t sustain their opening day’s solid quote as they ended the sale 30 to 40 cents down. It was the same pattern with the crossbreds as a smaller selection, just 17%, remained unchanged on the opening day only to run out of steam on Thursday dropping 10 cents.

A disappointing sale as the small catalogue and more favourable exchange rate couldn’t move the market in a positive direction. The political changes in Greece and France and more bad economic news out of Europe (several countries slipping back into recession) is weighing heavily on the market with most traders happy to take a “wait and see” approach at the moment even though stocks are low in China and the wool pipe-line is empty. Even selling one container of certain types is a battle at these levels. Hopefully some good news comes out of the IWTO conference held this week in New York. Next week is another historic week for Macwool as we offer our largest catalogue thus far, 419 lots totaling 2110 bales late on Thursday. Hopefully the market can sustain these levels.      

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

                Eastern 1155 cents ê 15 cents compared with 04/05/12                        1.0110 ê 0.0198 compared with 04/05/12

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1182 cents ê 13 cents compared with 04/05/12