Weekly Market Wrap

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With Adrian Field, Melbourne
Trading Manager

June 29nd, 2007

What orderly marketing?

THE eastern market indicator fell a further 35 cents per kilogram this week to close at 931c/kg.

The promising news was that a slight recovery in the market was recorded on the final day of sales, especially for fleece wool.

Of the 56,563 bales offered, 17.9 per cent was passed in. Sales were held in Fremantle, Sydney and Melbourne.

Fine Merino fleece was again most affected, although most types received significant discounts.

Southern region

Results were very similar to last week, with fine fleece again falling by 30c/kg and 50c/kg, while medium to broad Merino types dipped 10-20c/kg. Wool of 22-23 microns was least affected.

Merino skirtings were similar to last week too, with the finer end suffering the most. Most types shed 20-30c/kg.

Fine crossbred fleece fell sharply, while broader types eased slightly. Wool of 26 microns fell almost 30c/kg, but recovered a little on the last day.

Cardings decreased 10c/kg for the week, with most of the falls occurring on the first two days of sales. Prices were solid on the final day.

Earlier this week, the offering scheduled for next week’s sales suddenly jumped by 22,000 bales – almost the equivalent of last week’s entire allocation.

A total 76,549 bales are now rostered for next week in all three centres. What affect might this have going into the annual sales break?

Numerous articles from rural journals this week illustrated this point.

It was two to three weeks ago that various industry members (from different organisations) stated that we were experiencing unsustainable price levels and that prices were due for a correction later in the year.

Consequently, allocations jumped instantly and the market is suddenly flooded.

Our overseas customers then think that our advice regarding the shortage of wool is not true, so we receive an instant backlash from them, which makes trading for the coming weeks very difficult.

Once again, we are dealing with a commodity that is therefore directly related to supply and demand. If we (the industry) have some control over supply, then we should have some control over demand.

We suspect prices will be subdued next week at the very least, but it all depends on the movement in the Australian dollar.

We hope prices remain solid before heading into the annual sales break, but this rarely happens at this time of the year, due largely to the big wool allocations.

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