Weekly Market Wrap

Adrian Field Trading Manager

With Adrian Field, Melbourne
Assistant Trading Manager

November 14, 2003

Strengthening dollar eases market

THE eastern indicator finished at 779 cents per kilogram this week, falling 20c/kg from last week.

The reduction in prices was largely due to the rise in the Australian dollar.

Since the middle of August, the indicator has fallen from 930 to 780c/kg, whereas in US dollar terms it has only fallen from 630 to 560c/kg.

Over the past month, most of the fall has been at the finer end, where 17.5 micron wool has dropped a massive 145c/kg, 76c/kg US.

Wool of 22 micron has decreased about 45c/kg, yet only 5c/kg US. This means that in US dollar terms, there has been a much greater fall in 17.5 micron than 22 micron wools.

Although the currency has played a major part in the declining prices, some wool types, such as fine wool, have fallen much further due to poor demand.

ABS export statistics have revealed that from July to September there has been a massive reduction in wool exports compared to the same time last year. We have exported 30.1 per cent less than the same period last year, which equates to 33 million kilograms (about 180,000 bales). China imports are also down a massive 41pc.

Figures released by the AWTA (from July to Oct) state that samples tested are down by 20.5pc, and testing in Queensland is down by an enormous 49.5pc. Tasmania is the least affected, down by only 8pc.

Production for this year (2003-2004) is now at 440mkg, down from 490mkg last year and 555mkg in 2001-2002.

Wool prices would not be where they are today if production had not reduced - they would be much lower.

It's still not all doom and gloom however. There has been information coming along the grapevine that next year should see some improvement in demand.

The market will probably continue to fall next week but only slightly. The currency is again the biggest factor, and if the dollar continues to strengthen, the market will continue to fall.

It is likely that we are still heading for the 750c/kg mark, with some types/microns not expected to fall in price much further - mainly the very fine end and the very broad end.

PAST ISSUES
November 7, 2003	September 26, 2003	July 4 , 2003
October 31, 2003	September 19, 2003	June 27, 2003
October 24, 2003	September 12, 2003	June 20, 2003
October 17, 2003	September 5, 2003	June 13, 2003
October 10, 2003	August 29, 2003	June 6, 2003
October 3, 2003	August 22, 2003	May 30, 2003
	August 15, 2003	May 23, 2003
	August 8, 2003	May 16, 2003
	August 1 , 2003	May 9, 2003
		May 2, 2003