Weekly Market Wrap
With Adrian Field, Melbourne
Trading Manager
May 21, 2004
Low Australian dollar kicks market
THE eastern indicator rose sharply this week to close at
798 cents per kilogram.
All types recorded considerable gains, with broad Merino
fleece of 24 microns jumping almost 40c/kg. This was positive
considering these broader wools had been falling away in price
for some time.
The main reason for the rise was the weakening Australian
dollar early in the week. This helped generate plenty of international
buying interest, particularly from China.
Most of the market gains were achieved on Tuesday and Wednesday.
On Wednesday, the dollar started to strengthen and this showed
in Thursday's market, where there was an overall fall of 4c/kg.
Some superfine wools, generally finer than 17.5 microns, received
enormous price gains. This is also good news for superfine
growers, and hopefully we will see some fresh business done
at these levels.
The current squeeze on supply is also helping to lift prices.
There is genuine demand at very good levels, but only for
selected types.
The dollar is proving to have a significant effect on prices,
so we can assume that next week's market will largely depend
on currency movement. However we have occasionally seen that
market activity can oppose the currency theory.
There was certainly a push to purchase wool quickly this week,
with shipment deadlines drawing closer. It only takes two
to three different companies competing against one another
to fulfil their commitments to cause a market spike. This
is quite common at different stages throughout the year.
We expect to see a steady market next week, with premium wools
continuing to receive premium prices.
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