Weekly Market Wrap

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With Adrian Field, Melbourne
Trading Manager

June 4, 2004

Indicator breaks 800c/kg mark

THE eastern indicator jumped 18 cents per kilogram this week to close at 808c/kg, the highest level since back in January this year.

All combing types recorded good rises, particularly Merino fleece wools, which jumped up to 32c/kg. Merino skirtings remained very solid and crossbred wools gained another 10c/kg.

The only category that failed to rise in price was the carding section, which fell about 5c/kg.

The main reason for the sudden lift was the fall in the Australian dollar. It dropped 2-3 per cent during the week, and is now sitting at 4c lower than this time last week. This is a very substantial fall within one week.

Again, the market lift represented a 2-3pc rise.

News

THE 'Hillcreston' property in New South Wales sold a bale of 12.6 micron wool this week for 75,000c/kg.

The wool volume exported in April was up by 14.3pc compared to last year, however the value of this wool was 3.1pc less.

There has been a 6.8pc increase in volume exported from December 2003 to April 2004 compare to the previous year.

There have been substantial increases into China and India, but decreases into Europe and Korea. Korea fell by a massive 71.4pc.

China has imported 43.6pc of all wool exported so far this season, which includes 50.4pc of all greasy wool.

The AWTA recorded a 22.5pc increase in bales tested in May compared to the same month last year.

This is an amazing result, although many growers may have held onto last year's wool following the sharp decline in prices after the Easter break. This could also explain why wool volume tested this time last year was suddenly down on the previous year.

Woolstores have also been extremely busy with receivals recently. In many cases, they are looking at two years production arriving.

Production forecasts are now being revised upwards compared with last year.

There has been a fall in volume of 19.5 and finer micron wools tested by 3.7pc. It appears there is less wool being produced in the 17.5 micron and finer category.

Efforts to restrict and hopefully eliminate dark fibre contamination are well on the way.
AWI has funded a program that will commence from July 1. The scheme will be known as 'Dark and Medullated Fibre Risk' (DMFR) rating scheme.

All brokers have been advised, as they are the first point of contact for woolgrowers.

Hopefully this program is successful in preventing contamination and strengthening our reputation as a quality, contamination-free wool producing country.

Outlook

NEXT week's sale will be held over two days and the national offering is only a little over 41,000 bales. Little change in the market is expected.

Prices may continue to rise, and once again activity will largely depend on currency movement.

Smaller volumes are expected to be offered over the next two months, which should help maintain price stability.

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