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Weekly Market Report

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With Mark Dyson, Managing Director

May 18, 2012

Market takes a dive as Europe uncertainty grows

THE wool market took a u-turn this week as uncertainty over Europe’s economic conditions continued.

The Eastern Market Indicator retreated 34 cents per kilogram to settle at 1121c/kg clean. The sharpest fall occurred on the first day of sales.

With the Australian dollar losing parity with the US dollar during the week and dipping below 99 US cents, the market lost 53c/kg in US terms to drift to 1114c/kg.

Nearly 40,000 bales came under the hammer, with the lower prices causing the pass-in rate to jump significantly to more than 23 per cent.

Finer wools suffered the most, with 17-18 micron types losing close to 80c/kg.

Broader wools were less affected, but still shed 20-30c/kg.

Supply of higher quality, low vegetable matter (VM) types continued to be low and attracted most of the competition.

There is currently a large supply of higher VM as well as cott and coloured wools, which are receiving heavy discounts.

Buyers are focusing strongly on the low VM wools to help balance the large amounts of poorer quality types.

Skirtings were in the firing line too this week, dropping 50-100c/kg, with poorer lines, like in the fleece sector, hit hardest.

Crossbred wools fared better, but still eased by 10-20c/kg, while cardings were 20-30c/kg lower in Melbourne.

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