Weekly Market Wrap

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With Adrian Field, Melbourne
Trading Manager

March 9th, 2007

Wool shortage kicks in

THE eastern market indicator jumped a massive 34 cents per kilogram this week to close at 943c/kg.

Exporters leaped straight out of the blocks on day one of sales this week. Merino fleece soared 20c/kg in the first 15 minutes of auctioning.

The alarming concern over wool volume at upcoming sales, combined with new business (helped by a weaker Australian dollar), has served to set the market bubbling.

About 6 per cent of the wool offered for the week was passed in.

Overall, most wools enjoyed good price rises, especially finer Merino fleece types.

Southern region

Merino fleece types jumped about 25c/kg, with some wools finer than 18.5 micron fetching up to an extra 60c/kg.

Merino skirtings strengthened overall - and again it was the finer end that caught the attention.

Crossbred fleece wools climbed by about 20c/kg for the finer end, while broader types remained solid. Cardings edged upward, but only slightly.

Next week's sales will again be held in Melbourne, Sydney and Fremantle.

The market forecast is difficult to predict due to the position that may be taken by particular exporting companies in the current climate.

There could be a real scramble on for exporters to hedge in the coming months. If large Chinese firms also decide to cover their positions, the market may heat up.

However, the market may also remain steady. Either way, the next three months should be interesting.

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