Southern Aurora Markets partner Mike Avery.

IT was another disappointing week on the wool spot auction market and forward trading suffered from discouraging demand signals.

Not even the signature Sydney Royal Easter Show venue could stop the rot.

Merino qualities lost between one and two percent for the week. Crossbreds were generally unchanged, and cardings continue to remain solid.

After trading on Monday, the April 2024 18 micron contract was relatively flat to cash as the forward market suffered from discouraging demand signals in the short and medium term.

This translated into little or no bidding or offering early in the week, though mid-week the market marker in the nearby months returned. Although the spreads were relatively wide there no activity to narrow them in.

On a more optimistic note, forward bidding in 2025 and 2026 continues to consolidate. The March 2025 19 micron contract traded at 1470 cents. This is 5 percent over the spot of 1402 cents. Interest remains throughout 2025 and out to June 2026 at 1470 cents. There are two small outlier bids of 19 micron at 1500 cents and 19.5 micron at 1450 cents — about 100 cents over spot — for January 2026.

This activity highlights the potential importance of a liquid forward market. It is generally accepted that a forward market requires volumes around 5pc of the under lying commodity to give valuable robust market signals. We are currently running less than one percent of the underlying. To put that into perspective on a standard auction week of 40,000 bales, we would need to see 2000 bales or 250 tons of activity to deliver accurate signals and opportunity to the pipeline.

While it is unlikely in the current price environment to see a marked increase in activity, now is the time to increase awareness and understanding. Price risk management has again become topical with vast swings in many rural commodities.

Unlike some other commodities, wool has an independent, robust, and dependable auction reporting system off which hedge products are settled. Education all along the pipeline is required if we are to build the liquidity that will convey the correct messages to the market.

Thus endeth the sermon. Have a happy and safe Easter recess. Sales recommence week beginning 8 April.

This week’s trades

April 2024 18 micron                                        1535 cents          10 tonnes

March 2025 19 micron                                    1470 cents              5 tonnes

Total 15 tonnes

Source – Southern Aurora Markets.