Spending cuts shake market

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Bob GarnantCountryman
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The Australian wool market finished 1.5 per cent lower last week when the US exchange rate rose by 0.7 per cent, according to Australian Wool Industries Secretariat Peter Morgan.

Dr Morgan said the Australian dollar started the week at 104 cents, but rose on Thursday — possibly due to President Obama’s announcement of $4 trillion in spending cuts in the US.

“The market eased again, but remains at very high levels in both currencies,” Dr Morgan said.

Dr Morgan said the quality of the offering in the eastern states was showing the effects of recent weather activity in the region, with increased quantities of cotted, discoloured, high vegetable matter and tender wools.

According to AWEX, 75 per cent of last week’s eastern skirtings had been affected by the seasonal conditions.

“Lower types were treated harshly by the market,” AWEX said.

“Premiums were rare, being paid to only a limited consignment of best-style, high-Nkt fleece wool.”

According to Landmark’s Wool Weekly report, the western market was least affected by the downturn on Wednesday, with positive results for the 19.5 and 23 micron categories.

“The Western Market Indicator lost just 13c, closing at 1288c, while the Eastern Market Indicator lost 23c, closing at 1352c,” it said.

The report said while continued growths in developed countries had helped retail sales of clothing apparel, there were obstacles ahead.

Landmark said countering post-global financial crisis growth were inflationary pressures such as the high cost of energy — for example, oil and gas — and food, especially the increase in cost of protein.

“These costs will cut back consumer spending on luxury items,” the report said.

Sales will be held in Sydney, Melbourne and Fremantle this week, in the last sale before the one-week Easter break.

A total of 50,297 bales were rostered for sale.

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