A STRONG Aussie dollar with lower demand triggered by the Chinese New Year has led to spot auction prices retracting from their record levels, impacting forward market prices and trading volumes.
This was most evident in the fine wools, as exporters question the ability of the market to sustain these levels into the autumn and beyond.
Some demand destruction is to be expected especially in the micron groups where supply is not as constricted. This supply imbalance has seen a movement of 100 cents in the 19-21 micron spread since January, from 342 cents to 242 cents.
Supply of 21 micron remains tight and this was reflected in the solid forward prices being received for the autumn with March trading at 1845 cents, in April at 1825 cents and in May at 1820 cents.
Most exporters and processors are anticipating a continuation of the volatile conditions in the short term ahead of a correction back to a longer-term trend line. Much will depend on the impact of the sustained price rally on demand and the oscillating Australian dollar.
Anticipated trading levels
Month 19 micron 21 micron
Feb 2100 cents 1840 cents
March 2080 cents 1820 cents
April 2060 cents 1800 cents
May 2050 cents 1780 cents
June 2030 cents 1740 cents
March 21 micron 1840 cents 5 tonnes
April 19 micron 2095 cents 5 tonnes
April 20 micron 1940 cents 5 tonnes
April 21 micron 1820/1825 cents 6.5 tonnes
May 19 micron 2070 cents 2 tonnes
May 21 micron 1820 cents 8 tonnes
July 19 micron 2040 cents 12 tonnes
Total 43.5 tonnes
Source: Southern Aurora Markets.