Weekly Market Wrap

Adrian Field Trading Manager

With Adrian Field, Melbourne
Assistant Trading Manager

May 16, 2003

Market takes another stumble

THE eastern market indicator fell another 88 cents per kilogram this week to finish at 862c/kg - the second largest fall within a week since 1991.

Of the total wool offering in Sydney, Melbourne and Fremantle, 49 per cent was passed in. The high pass-in rates have most likely prevented the market from falling even further.

Most of the wool on offer is being catalogued for the second or third time, with very little fresh wool coming through the system.

Finer micron wools have been most affected by the price dive. Wools in the 20-26 micron range are still profitable at current levels, with one grower quoted saying: "I would prefer to get off at the fourth floor rather than the first (bottom)''.

The subdued buying activity was generated mainly from local processors, with Europe, Japan and existing contracts for Asia making up the balance.

There is now very little enquiry or new business from Asia, our biggest importer of wool in recent years.

Europe has started to show interest in certain types, but mainly at the lower (cheaper) end of the market, and therefore we could see combing wools soften even further.

Hopefully we are not too far away from a suitable level for the European marketplace, which would at least provide some stability.

Once there is some progress with containing and possibly treating the SARS disease, China's economy should also turn around quickly, helping to revive the wool market.

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