Weekly Market Wrap

Adrian Field Trading Manager

With Adrian Field, Melbourne
Assistant Trading Manager

December 5, 2003

Shipping commitments lift market

The second last sale prior to the Christmas break has seen the eastern market indicator close at 788 cents per kilogram, 10c/kg higher than last week.

Several exporters are trying to fill orders that need to be filled and shipped within the next fortnight, and this is driving the market activity.

If two or more exporters need to fill orders of a similar type of wool and they only have limited time to do so, naturally a squeeze is created and prices will lift.

It is not often that you see the Australian dollar and the market indicator go up at the same time, but that is exactly what happened this week.

Most types received significant price rises, apart from 23 micron combing wools and most carding types, which were only slightly higher than last week.

Outlook

Next week's sales will again run in all three centres and bales on offer total about 66,000.

Melbourne has the largest quantity on offer and will again hold a three-day sale.

Once exporters start to fill their orders, the pressure and the market could ease.

The other possibility is that there may be new business confirmed at or near current market levels, which would mean a positive finish to the year and most likely a positive start to next year.

General news

The ShearExpress continues its trial period in Victoria's Western District. Although there are positives such as clean/tidy shearing and a safe working environment, the concerns are that it's not economically efficient.

At best, the aim is to shear 1200 sheep per day. The total costs, which obviously include all labour and running/maintenance, are estimated at a minimum $5.50 a sheep. The current average all up cost through conventional shearing is between $3.60 and $4 per sheep. The operation is currently struggling to achieve 800 shorn sheep.

However, it appears that more people are starting to warm to the concept, and like anything new there will be teething problems.

There are also significant amounts of money being invested (through AWI) and it would be a shame to see another expensive shearing innovation concept fail.

There is a future for ShearExpress provided that the current problems and other related issues are ironed-out and higher throughput is achieved.

Commonsense suggests it will be more effective and efficient for larger clips, however traditional methods are likely to be around for some time yet.

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