Weekly Market Wrap

Adrian Field Trading Manager

With Adrian Field, Melbourne
Assistant Trading Manager

August 15, 2003

Stronger overseas interest drives market

THE wool market rose sharply this week with increased buying enquiry on Monday and Friday.

The eastern market indicator closed at 926 cents per kilogram, a rise of 27c. All micron indicators and type categories increased in price.

A small amount of business was confirmed earlier in the week, which, combined with a small offering, contributed to a sudden boost in prices.

The forecast for wool offerings is low, with sales expected to continue two days per week for the next six weeks.

The latest estimate of average micron has been put at 21, one whole micron finer than two years ago. This reconfirms the massive swing to finer wools and the significant reduction of the broader volume. In the early 90s, the average micron was 23.

Wool production has now been revised to fall another 30 million kilograms for the 2003-2004 season, equating to about 170,000 bales, which is significantly lower than earlier estimates. This figure equates to about three sale weeks Australia-wide. Current sales are averaging 55,000 bales.

Although many parts of the agricultural region are receiving good rains and the season is shaping up to be promising, other areas are still struggling and the extended drought almost looks a certainty. Tasmania and areas of Victoria are receiving excellent rain, but much of Queensland, New South Wales and parts of SA are still desperate.

Meanwhile, a similar market scenario is anticipated next week, whereby the supply shortage is likely to help maintain current price levels.

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