Southern Aurora Markets partner Mike Avery.

 “When everything seems to be going against you remember the airplane takes off against the wind, not with it” – Henry Ford.

WOOL trading conditions remained relatively flat last week in the first Australian auctions after the three-week recess.

Reports of sporadic interest helped along by a weaker Aussie dollar gave a glimmer of hope for the start of the regular season.

But the stronger Aussie/weaker USD dashed those hopes and we returned to a pattern that has dogged the market for the eighteen months or more.

The tepid demand was short-term focused, indent-dominated and hypersensitive to currency fluctuations.

Prices fell across the board between 1-2 percent at auction in Australian dollar terms, but rose slightly in USD. Finer wools were most affected in the Merino types, but medium Merinos and fine crossbreds couldn’t avoid a slight downturn. Coarser crossbreds held up well rising a few cents for the week.

With the focus on the short-term delivery window, the forward market continues to be ignored, therefore providing little or no real signals to either producers or processors. This is a potentially deadly and unhealthy position for a market to be in.

Recent active messaging by industry peak bodies has yet to bare fruit. With the most recent production forecast having volumes down by as much as 10pc, processors and end users need to signal their intent.

The light forward trading that has occurred for 2025 and into early 2026 has occurred at 100-130 cents above current spot levels. This needs to return to stimulate confidence.

Producers need to follow suit by either hedging some of their clip should the opportunity arise or posting target levels.

The only bids of consequence are in January 2026. The 19 micron contract is bid at 1500 cents (130 cents over spot) and 19.5 micron at 1450 cents (120 cents over spot). The spot market hasn’t traded above 1500 cents and 1450 cents since 6 June 2023.

Although an imperfect indicator this is at least positive. Hopefully we will see more encouraging signs soon. There were no trades on the forwards.

Source – Southern Aurora Markets.