Weekly Market Wrap

Adrian Field Trading Manager

With Adrian Field, Melbourne
Assistant Trading Manager

November 28, 2003

Market eases slightly

The eastern market indicator slipped just 3 cents per kilogram this week to close at 778c/kg.

The northern indicator dropped just 1c/kg, while the southern indicator fell 5c/kg.

Although the market drifted slightly, buying activity was fairly strong in comparison to previous weeks.

Wools in the 22-24 micron categories were affected the most and fell about 10c/kg, while 26-28 micron wools increased by up to 10c/kg.

Most Merino fleece fell slightly, except for 21 micron types, which remained firm.

Merino pieces and bellies also dipped, while most crossbred types held firm.

The next two weeks will surely test the market, with volumes on offer rising.

Melbourne will be holding three-day sales for the final two weeks prior to Christmas. This is a sign of the times, as it wasn't that many years ago that we had four-day sales at this time of year.

Meanwhile, Australian Wool Innovation has decided to cut this year's research expenditure by $10 million due to a fall in prices and the dwindling wool clip. The foreseen reduction in funds generated through the wool levy is the main reason for the decision.

Who would have thought that black fleece wool was going to be worth the same as white fleece wool for the same micron? This nearly happened last week when a small amount of 24 micron fleece wool made only 30c/kg less than the equivalent white wool.

There seems to be very good demand for well bred brown/black wool in niche market areas, as it doesn't require any dye - therefore being 100 per cent natural. However, growers would not want to necessarily rush out and start growing black wool based on these results.

The jury is still out on the Shear Express unit currently being trialled south of Hamilton in Victoria's Western Districts.

One Western Australian grower criticised the move to trial the operation in Victoria, saying that it was working fine in WA and that it's funny that the people who developed it are from WA.

He also added that it needs real wool people working on it. Mmmm! Surely he's a very intellectual person who realises that "The East'' producers far more wool, and therefore it needs to be trialled in densely sheep populated areas to prove that it can work properly. It's called commercial decision-making. Perhaps he was just throwing out some bait?

A pen of first cross ewe lambs sold for a massive $168 in Naracoorte (SA) last week - the sheepmeat industry isn't showing any sign of slowing down in the short-term.

It seems there are plenty of overseas customers claiming on "poor wool deliveries''. This may be a genuine claim with the very odd order, but I know for a fact that some customers are just claiming in the hope that they can recover some of the equivalent value lost in the market over the past few months.

It's the equivalent of a Stud selling a mob of ewes to another grower for $100 per head and three months later the price equivalent (in value) has dropped to $70 dollars. The grower then claims that the sheep are not up to standard in order to try and get some form of compensation.

Market anticipation

We expect the market to struggle over the next couple of weeks heading into Christmas unless there is a sudden lift in new orders/demand.

Certain types will be well sought-after, particularly for wools which need to be shipped before Christmas.

Signs coming in from overseas suggest that there will be further falls before a correction early next year.

The strong Australian dollar combined with larger volumes on offer is the main reason for a weaker market.

Having said that, we only expect a slight weakening.

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