Weekly Market Wrap

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With Brian Vagg, Melbourne

November 2, 2007

Strong dollar, large offering tests market

THE eastern market indicator (EMI) fell 21 cents per kilogram this week to close at 953c/kg, only 42c/kg below the season high of 995c/kg.

Again, the market was tested this week with a large national offering of nearly 64,000 bales and a strong Australian dollar trading at around 92 US cents.

It is difficult to get a gauge on prices, with the drought causing a big variation between the best lots and the opposite end of the market. Unfortunately, due to the seasonal conditions, there is nothing that could have been done to prevent mid-breaks.

Nationally, finer wools appeared to record the biggest price falls, with most Merino fleece microns easing 30-40c/kg clean. The broader types may have escaped simply because of the lack of supply this week, especially of 23-micron and broader wools.

Prices for most microns in both Australian and US dollar terms are well above the average prices experienced over the past five years.

Crossbred fleece is continuing to struggle, which could be due to the availability of these types from non-Australian countries. The increase in crossbred wool production in Australia would also be having some impact.

In real terms, skirtings and cardings are holding on well, with many types returning record prices.

The free prem / open top prices are still strong. We are seeing these types return higher prices than full wool lots on many occasions.

The national passed-in rate was 14.1 per cent, with 8932 bales remaining unsold.

The fourth Newcastle sale of the season will be held next week, with a little more than 56,000 bales rostered for sale nationally.

Southern region

Once again, 21-micron and finer fleece attracted less support, falling 25-30c/kg. The mid 17-micron types fell nearly 45c/kg. The better types, comprising high newtons per kilotex (NKT) and low mid-breaks, remained firm.

Each day the offerings comprised a large quantity of lower styled, low NKT and high mid-break lots, which attracted the significant discounts. Broader Merino fleece eased slightly, but a lack of supply allowed for price stability.

Most of the Merino skirtings dipped 15-20c/kg clean. Some of the bury skirtings were a little neglected.

Finer crossbred fleece (27.5-micron and finer) fell 10-15c/kg for the week and 32-micron crossbred wool closed around 20c/kg below last week's market.

All crutchings and locks received less support and decreased 12-15c/kg. However, over the past six to eight months, cardings have attracted strong support, rising and maintaining reasonably high levels.

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