As mentioned a couple of weeks ago, trading conditions have been deteriorating due to a range of issues including an increase in stock levels of top and yarn and the ongoing credit squeeze had led to sluggish demand but the saving grace has been the low supply factor. When traders become desperate to sell and drop prices it also makes customers nervous as what they buy today will probably be cheaper tomorrow and hence the trend continues, this week we also had the effect of a higher exchange rate and medium wool types 19.5 to 22.0 micron range fell 20/30 cents clean with the discount on inferior types even greater. Broad wool types were least affected as mills oversea's switch production to low cost types to keep machinery active and limit exposure, and better finewool types also stayed firm due to limited quantities this time of year.

        Expect this downward cycle to continue in the short term unless supply becomes critical or exchange rates drop drastically. Suggest current levels of 1200 cents/per kg clean for 19.0 micron is very good and 950 for 21.0 micron is historically high, and would only expect a large discount on today's terms for new season wools post July as supply increases.