Weekly Market Wrap

Adrian Field Trading Manager

With Adrian Field, Melbourne
Assistant Trading Manager

October 17, 2003

Market begins to stabilise

THE eastern market indicator fell only 3 cents per kilogram at sales this week to close at 838c/kg.

However, this probably does not illustrate a true indication of the market level considering the stylish wools on offer in Newcastle. The northern region increased 6c/kg, while the southern dropped 9c/kg.

It was still positive news though following four weeks of fairly significant falls. The market indicator has now shed 89c/kg over the past 5 weeks.

Passed-in rates this week were the lowest for some time, equating to 14.8 per cent.
There was a substantial amount of wool withdrawn prior to sale.

Although we are experiencing some stability, overseas enquiry and demand is still subdued. China is importing only half of what it imported the same time last year. Europe continues to reduce its imports, and Korea has virtually disappeared.

Despite the falls, prices for 20 micron wools and broader continue to be good compared to the levels over the past decade. It was only two years ago that 22 micron fleece wool was worth 590c/kg clean. It is currently selling for 900c/kg clean.

There’s a possibility the market could still fall further. One thing that has occurred is the gap between microns has started to widen, which is understandable considering that generally the finer the wool, the more restricted you are for the source of income.

This year the AWEX Eclipse selling board has offered 15,000 bales and sold 3000, compared to an offering last year of 24,000 bales and sales of 12,000. This is another indication of what has happened to both production and market levels over the past 12 months.

The good news continues for sheep meat producers, with Poll Dorset rams selling this week for up to a record $35,000.

The alpaca industry has also exploded. One male sold this week on the Bellarine Peninsula (near Geelong) for a massive $145,000. The buyer was quoted referring to the sale as “paying peanuts’’ – pretty expensive peanuts! The sale of 124 animals grossed $1,063,000.

Next week’s sales will be held in Sydney, Melbourne and Fremantle with a total of 63,000 bales rostered. This is the largest offering for some time and will certainly test the market.

It is likely to struggle and edge downward a little further.

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