Weekly Market Wrap

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With Brian Vagg, Melbourne

February 22, 2008

Market levels

GLOBAL market uncertainty, an Australian dollar above 90 US cents and an unexpected flush of wool onto the market has not assisted sales this week.

The wool market opened on another weaker note this week following the fall of last week.

On Tuesday the southern market opened with Merino fleece trading around 35 cents per kilogram below last week's level.

Thankfully, towards the end of the day this trend reversed, with most of the broader types regaining 15 to 20c/kg. The eastern market indicator (EMI) fell 11c/kg to 981c/kg on the first day of trade this week.

On Wednesday the EMI fell 5c/kg and another 2c/kg on Thursday to finish the week at 974c/kg (18c/kg lower than last week).

The Australian dollar was trading nearly 3.5c higher this week. If you convert the current prices in US terms, most microns are actually trading fully firm to a littler dearer compared with last week.

A large national offering of nearly 62,500 bales also didn't assist the market.

On Thursday there was more interest, with many more companies participating in the market, which resulted in most Merino types remaining firm.

The finer Merino types closed the week around 20c/kg lower, with the broader types generally 30c/kg easier.

Crossbred types remained firm and better skirtings received good support.

Locks and crutchings closed around 10c/kg easier.

The national pass-in rate was 18.2 per cent. Next week is the last Newcastle sale of the season and there will be close to 55,000 bales on offer nationally.

Where the market will head is proving very hard for the experts to predict, as supposed supply concerns are weighed up against real demand and a global economic slowdown.

Mulesed wool ban

A meeting between Wool Producers president Don Hamblin and Swedish retailer Hennes and Mauritz (H&M) has failed to break the company's stance on refusing to sell products made with wool from mulesed sheep.

Mr Hamblin this week travelled to Sweden and Germany to meet with dozens of retailers, manufacturers, fashion houses and textile representatives.

But a meeting with 1500-store retailer, H&M, was the main reason for the trip, after a flurry of media reports about its move to ban Australian wool from mulesed sheep.

According to Mr Hamblin, H&M purchases up to 0.5pc of the Australian wool clip - between 500 and 1500 tonnes annually.

It has a market position as a known leader in corporate and social responsibility, hence the stance to ban Australian wool, as the company believes mulesing alternatives are not developing fast enough. Source: Rural Press

CSIRO wool scour set for private hands

The CSIRO fibre processing plant at Geelong, Victoria, looks set to be sold to private interests.

The national research agency said the small wool scour was not required for research purposes and was costing money to run.

A variety of fibre producers including Perendale, Black and Colored wool, Alpaca, Cashmere and Mohair producers had been using the scour to process their product and are now in danger of being left without a local processing option.

CSIRO confirmed its ongoing commitment to strategic research of the wool industry, product development and market opportunities in conjunction with AWI. Source: Rural Press

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