A nervous start to sales expected this week as the Aussie dollar hits 18 year highs, with economists predicting higher rates yet to come. Greasy wool prices have held well considering lack of business at higher exchange rates, but the real test will be over the next couple of weeks if the market can hold. On the positive side this week National quantities are down with no sale in WA and exporters are nervous with supply concerns next year looming large. Exporters generally agree that in the first six months of next year we will see an even dearer more volatile market, meaning forward sales are too dangerous so exporters will start to accumulate stock during the next 2/3 months leading up to Xmas.

         On a sad note we had the announcement a couple of weeks ago that Japanese firm Itochu has ceased trading wool, they have been buying Australian wool for over 50 years and were the biggest buyer at auction for 35 consecutive years. The reality is margins are tight and public companies must return profits to their shareholders and wool ties up large amounts of capital for very little return.

          Expect this week the market to ease 10/20 cents but support to be found at these levels as previously mentioned exporters are nervous with supply concerns and will see any drop as an opportunity to accumulate stock at a lower levels.