THE auction market continued to struggle to find a level this week, with 19 micron wools losing around 40c/kg and 21 micron lines dipping 25c/kg as exporters have difficulty finding offshore demand.
Processors continue to look for further relief from a market that has trended upwards for 28 months. It is important to note that during that upward channel the market has suffered numerous retractions. The deepest in the March-April period last year was 10 percent and there was an 8pc fall in the early spring of 2017. The latest fall for 19 microns is 6.6pc and for 21 micron 4pc.
The forward market is pricing a similar pattern for this season, but off the higher levels achieved this February.
The 21 micron levels look more attractive as the forward market is indicating that the difference between 19 and 21 micron will hold around the current 200-cent mark. This is about the average of the last two years and above the longer term (10 year) average of 84 cents, but below the peak of 471 cents achieved in March 2017.
Anticipated trading levels
Month 19 micron 21 micron
March 1980 cents 1820 cents
April 1960 cents 1780 cents
May 1940 cents 1750 cents (Spot May 2017 19u 1920c, 21u 1500c)
June 1940 cents 1750 cents (Spot June 2017 19u 1860c, 21u 1530c)
July 1900 cents 1700 cents
Aug 1870 cents 1670 cents
Sept 1850 cents 1640 cents (Spot Sept 2017 19u 1800c, 21u 1550c)
April 19 micron 2020 cents 7 tonnes
April 21 micron 1820/1850 cents 13 tonnes
May 21 micron 1795/1840 cents 7 tonnes
June 19 micron 1960 cents 5 tonnes
June 21 micron 1760 cents 5 tonnes
Total 37 tonnes
Source: Southern Aurora Markets.