Weekly Market Wrap

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With Mark Dyson, Managing Director

February 18, 2005

Market buckles under pressure

THE sudden large offering (second largest of the selling season), a rising Australian dollar and poorer styled wools combined this week to cause a downturn in the market.

The eastern market indicator fell 20 cents per kilogram to close at 725c/kg.

Not only was it the largest price fall for quite some time, but passed-in rates climbed to 20.5 per cent. Re-offered wools accounted for 12.5pc and 6.4pc was withdrawn.

Of the New Zealand wool offered, more than 45pc was passed-in.

Poorer style wools received large discounts, while better styled, sound wools were less affected.

Nearly all Merino types dropped in price by 20c/kg, with some wools falling by up to 35c/kg. The same result was recorded for Merino pieces and bellies.

Crossbred wool was less affected, dipping by about 10c/kg. Cardings' strong run finally came to an end, shedding about 15c/kg.

Surely this week's market results should trigger a response to a more consistent level of offerings. It questions the coordination of how much wool should be allocated to sale from the various brokers.

Nearly half of the offering in this week's national sales was offered in Melbourne. This equated to more than 35,000 bales, which was 15,000 bales more than Launceston's total from last week.

It's pretty simple - records indicate that a sudden increase in volume has a negative effect in prices. There are often simply not enough orders to cater for such increases.

A solution needs to be developed as soon as possible in relation to how much wool is allocated for sale.

Next week's sales will be held in Fremantle, Melbourne and Newcastle. The combined offering will total 67,359, a more normal level and 9000 bales less than this week.

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October 15, 2004
Adrian Field
Mark Dyson
Managing Director
Special Report by Adrian Field
Trading Manager Adrian Field takes a look back - for a better wool future!

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