THE cautious note expressed by buyers on the wool forward markets last week was justified as the spot market gave back some of its strong gains of 2017.
The 19 micron index opened the New Year at 1622 cents and completed its run at 1959 cents last week. This week there was a 4 percent retracement to 1885 cents. The 21 micron index gave up 5.5pc, settling near its New Year opening of 1412 cents.
Forward prices held relatively well as the market had factored in the expected pull back from historically high prices, especially on the finer wools. Forwards are still trading in the spring at high percentile bands. The 95 percentile band for 19 micron sits at 1650 cents. In September and October 19 micron traded between 1700 and 1750 cents early in the week. Bidding at the close of the week ranged between 1700 to 1720 cents in September and October, falling to 1650 cents in November.
The 21 micron index closed with spring bidding, ranging between 1360 and 1370 cents, which is just below the 85 percentile band of 1375 cents.
We expect these levels to hold prior to next week’s auction series as buyers gauge the offshore demand and the market looks to find a base.
Trade summary
May 21 micron 1420 cents 19 tonnes
July 18.5 micron Put option 1935 strike 50 cent premium 5 tonnes
Aug 21 micron Put option 1350 strike 25 cent premium 2.5 tonnes
Aug 21 micron 1400/1405 cents 10 tonnes
Sept 19 micron 1735/1750 cents 7 tonnes
Sept 19.5 micron 1630 cents 2.5 tonnes
Sept 21 micron 1375/1395 cents 12.5 tonnes
Oct 19 micron 1700 cents 2.5 tonnes
Total 61 tonnes
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