Weekly Market Wrap

Adrian Field Trading Manager

With Adrian Field, Melbourne
Assistant Trading Manager

May 30, 2003

Market surges on smaller offering

WHILST many in the industry were anticipating the market to stabilise and perhaps strengthen in light of such small offerings, not too many were expecting such a surge in prices recently.

Demand was evident for all types, but particularly Merino wool. Crossbred wool was dearer but not as extreme.

In the past month we have witnessed price falls of up to 233 cents per kilogram, and then a sudden turnaround of 71c/kg in one week.

The main reason for the sudden lift in prices is the small offerings available.

Combine this with a small amount of trading into Europe as well as exporting firms trying to fill current commitments, and it does not take much to kick the market along.

Next week will herald one of the smallest offerings of all time, with 11,976 bales catalogued in Melbourne and a fraction more than 24,000 bales Australia-wide. For the short-term, the market could continue to rise a little.

With such extreme rises and falls in the market, this type of environment is not healthy and would be affecting many in the trade.

The wool supply shortage will continue to drive the market, but only until commitments for new and current requirements are met.

China is still fairly quiet, and unless they decide to come in and buy, the market should start to steady.

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