AWIS wool market review - Week Ending September 14 (Week 11)

The AWEX Regional Indicators finished 3.5% higher, on average, at sales in Sydney, Melbourne and Fremantle this week. The US exchange rate rose by 2.6%, taking the EMI in US currency to 1003¢, up by 6.0% since last week.

The market opened very strongly on Wednesday, with good rises across all micron ranges and wool types, apart from the broader crossbreds in the North. The greatest gains on a percentage basis were from 19.0 to 22.0 microns. The size of the increases was a surprise, as the current feedback from China is that business is very quiet. Discussion within the trade suggested that the market may have been driven by companies who needed to complete shipping requirements. There was also speculation as to whether it was because the sale coincided with the start of the Nanjing Wool Market Conference.

The market maintained its overall level on Thursday, with further gains at the fine end and among the crossbreds. There was some easing from 19.0 to 22.0 microns.

The sale of an 11.1 micron lot for 110,000¢ in Melbourne on Tuesday was a feature of this week’s sale. AWEX reported that this is the finest lot ever sold at auction.

The EMI is 316¢ (-24.8%) less than in the same week last year and the WMI is 307¢ (-24.2%) less than in the same week last year. The lift in this week’s market has brought the falls in the EMI and the WMI since the start of the season back to 112¢ (-10.5%) and 110¢ (-10.7%), respectively.

In other countries, the South African Cape Wools Indicator was up by 2.7% since last week. In New Zealand, the Wool Services International crossbred Indicators were mixed, varying from small falls to unchanged or slightly firmer.

Among other fibres, December Futures for cotton fell during the week, but recovered on Friday to finish the week at 75.90¢, down by 0.5% from the previous week.

Centre	Last Sale		Day-to-Day Changes (Week 11)			Sale-to-Sale Change	Closing Indicator	Sale-to-Sale Changes
	Week	Indicator	Tuesday	Wednesday	Thursday			US ¢	Euro ¢
Eastern	10	927	No Sale	+29	+2	+31 (+3.3%)	958	+57	+21
Northern	10	944	No Sale	+30	0	+30 (+3.2%)	974	+57	+21
Southern	10	915	No Sale	+27	+4	+31 (+3.4%)	946	+57	+21
Western	10	924	No Sale	+37	No Sale	+37 (+4.0%)	961	+63	+27

33,192 bales were on offer, compared with 36,758 bales last week. 6.2% were passed in, comprised of 4.1% in Sydney, 6.5% in Melbourne and 8.5% in Fremantle. Pass-in rates for Merino fleece and skirtings were 6.9% and 5.2%, respectively.

31,128 bales were cleared to the trade.

The year-to-date offering is 49,359 bales less (-13.6%) than at the end of the same week last year (see table below). Expected offerings over the next three sales indicate that this figure will move to around -11.5% over that period.

Exchange rates during the week were largely influenced by expectations of what might happen in Germany where the courts were considering Germany’s ability to participate in the Euro Stability Mechanism (EMS). The court’s approval led to a significant lift in global economic confidence and in the US exchange rate.

The week ended with the United States announcement of the third round of “Quantitative Easing”. The Federal Reserve announced that interest rates will be held at close to zero, at least until mid-2015, and that $140 billion will be injected into the US economy each month until employment grows. As expected, share markets reacted favourably and the Australia / US exchange rate rose. The closing Reserve Bank exchange rate on Friday was 105.79¢, up by 1.09¢ since the previous day and only just below the season peak.

Exchange Rates (Reserve Bank)	Last Sale	Day-to-Day Changes					Sale-to-Sale Change	Closing Value	Season Min & Max
		Fri	Mon	Tues	Wed	Thur			Min	Max
United States	102.05	+1.16	+0.30	-0.17	+1.36	+0.01	+2.66 (+2.6%)	104.71	101.70	105.93
Euro	81.40	+0.27	-0.71	-0.01	+0.43	-0.36	-0.38 (-0.5%)	81.02	81.02	85.63

Sale-to-Sale Changes in Average AWEX Merino Micron Price Guides (MPGs)
Micron	16.5	17.0	17.5		18.0		18.5		19.0		19.5		20.0		21.0		22.0		23.0		24.0
Since Last Sale:
Change ¢	+56	+54	+48		+44		+37		+44		+45		+41		+35		+26		+12		+11
Change %	+4.2%	+4.3%	+4.0%		+3.9%		+3.4%		+4.1%		+4.2%		+3.9%		+3.3%		+2.5%		+1.2%		+1.2%
Since Start of the Season:
Change ¢	-195	-125	-128		-140		-155		-133		-117		-122		-132		-160		-191		-179
Change %	-12.2%	-8.7%	-9.3%		-10.6%		-12.0%		-10.6%		-9.5%		-10.1%		-10.9%		-13.2%		-15.9%		-15.7%
Since Same Week Last Year:
Change ¢		-850	-697		-578		-489		-423		-360		-298		-255		-221		-142		-68
Change %		-39.4%	-35.7%		-32.8%		-30.1%		-27.3%		-24.5%		-21.5%		-19.1%		-17.3%		-12.3%		-6.6%

Skirtings followed fleece types up in all centres on Wednesday and made further rises on Thursday. Crossbreds had another good week, apart from a slow start in the North on Wednesday. The limited supply of 32 micron wools was in very keen demand resulting in a 7.9% increase in its average AWEX MPG. It was also a very good week for all oddment types, with significant rises reported on both days.

Sale-to-Sale Changes in Other Average AWEX Price Guides
Micron	25.0	26.0	28.0	30.0	32.0	MC#
Since Last Sale:
Change ¢		-13	+9	+8	+35	+27
Change %		-1.6%	+1.6%	+1.5%	+7.9%	+4.8%
Since Start of the Season:
Change ¢	-145	-128	-66	-33	-18	-18
Change %	-13.8%	-13.7%	-10.4%	-5.6%	-3.6%	-3.0%
Since Same Week Last Year:
Change ¢	-65	-72	-127	-87	-110	-178
Change %	-6.7%	-8.2%	-18.3%	-13.6%	-18.8%	-23.4%

# Average Merino Cardings Price Guide

Buyers for China were dominant this week, followed by strong support from buyers for Europe and India.

Highlights from the Australian Bureau of Statistics export data for July, and for the July to July period for the top five export destinations and three other key destinations follow.

Country	% Share of Australia’s Wool Exports by Weight of Wool Shipped			Year-on-Year % Change in Wool Exports
	July 2012	July - July This Season	July - July Last Season
China	74.7%	74.7%	72.2%	21.7%
India	8.0%	8.0%	10.1%	-6.1%
Italy	4.5%	4.5%	4.1%	31.3%
Czech Republic	3.8%	3.8%	2.4%	85.2%
Taiwan	2.8%	2.8%	3.2%	4.3%
Korea	1.0%	1.0%	2.1%	-42.0%
Malaysia	0.8%	0.8%	1.1%	-15.6%
Thailand #	0.0%	-6.1%	1.4%	8.0%
# Affected by Bangkok floods in October 2011			Change all Countries	17.7%

Sales will be held in Sydney, Melbourne and Fremantle next week, when 43,318 bales are currently rostered for sale. Present estimates for the following two sales (Weeks 13 and 14) are 37,610 and 46,300 bales, respectively; a decrease of 5.8% over the three sale period when compared with last year.

The New Zealand Merino Company is rostered to offer 1,000 bales in Melbourne next week and 2,000 bales in Week 14.

In South African sales, the Cape Wools Indicator was up by 2.7% since last week against a 3.2% appreciation of the Rand against the US Dollar and a 0.3% appreciation against the Euro. 4,681 bales were on offer.