Last week prices stabilized despite record low offerings of one day sales in Sydney/Melbourne only, this could be seen as a dissapointing result with only the medium microns finishing 5/10 cents dearer. As mentioned previously if Chinese mills followed the price spike we could expect further solid gains with the limited supply, however demand is still limited with only a few prompt orders sold during the past week. With this in mind we expect only a firm finish to the season in coming weeks before a National 3 week recess. I will speculate further in coming weeks but at this stage expect August sales to resume cheaper with increased supply being the main factor coupled with continued subdued demand, the only X factor is an unforseen large drop in exchange rates.

        Another headline circulating the media last week was the restructuring of Futuris/Elders, with the wool trading division of BWK Elders announcing they will cease greasy trading and only buy to supply their German mill in Bremen and joint venture in China. It is a reality of large corporates that they expect reasonable returns for their shareholders, and with wools very small trading margins and large capital investment it can no longer deliver a reasonable return. We need large companies like ABB and Elders to finance the industry which have payment terms in some countries of 120 days after delivery, and as we all know finance is becoming more expensive and difficult to obtain.