Weekly Market Wrap

Adrian Field Trading Manager

With Adrian Field, Melbourne
Assistant Trading Manager

February 13, 2004

Mixed market moves

THE eastern market indicator slipped to 775 cents per kilogram following some mixed market trends throughout the week.

On Tuesday, the southern market dropped 15c/kg, but the wool on offer was predominately cardings. This was no great surprise and is generally the case with the carding market, because wools differ slightly compared with typical mainland selections.

On Wednesday, the northern market indicator fell below the 800c/kg mark – the first time since the beginning of January.

In the south, prices for spinners’ wools increased by as much as 200c/kg, whilst normal topmaking wools remained generally unchanged. Some better styled, longer pieces were up to 30c/kg dearer. Crossbred wools were generally unchanged.

The northern market indicator remained generally unchanged on Thursday, whereas the southern market fell sharply to close at 763c/kg. Most normal topmaking wools broader than 19 micron received heavy discounts, with some wools up to 36c/kg cheaper. Best topmaking and spinners’ style wools were less affected.

The sudden fall in prices was mainly due to the combination of higher currency levels and the fact that next week’s volume of wool on offer has increased sharply.

It is the same old story. If there is a sudden flood of wool onto the market with no change in demand, the market will react.

This type of scenario has existed for some time now. If there was some form of consistency in volumes on offer, the market would have a better chance of finding stability.

The industry needs to collectively look at the possibility of altering policy on wool volumes offered for sale.

General

Although there has been mixed reactions and much confusion over the latest trade deals with America, it looks like the wool industry has been one of the winners – in time.

The industry will have to wait another four years for free access (zero tariffs) for greasy wool, and a further 11 years for semi-processed/processed wools.

Outlook

Evidence from the last day’s sales suggests the market will remain subdued early next week, and maybe recover towards the end of the week. It largely depends on how much business (new orders) is confirmed through until Tuesday, as well as the Australian dollar. The currency played a significant role in the lower prices this week

Estimated volumes of wool rostered for the following week have dropped significantly, so the “glut’’ on the market may be short-lived.

We expect an initial dip in prices next week before a late recovery.

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