THE spot wool auction market closed Wednesday ahead of the three-week winter recess with all microns posting gains.
The magnitude of the increases varied widely as selection and the need to catch vessels saw irregularities in the indices, with 19 and 21 micron values dropping 95 cents throughout June.
The tight auction selection has seen 21 micron recover 45 cents in the two sale weeks of July, while the 19 micron indice has remained relatively stable, gaining just 2 cents.
The forward market has taken this into consideration, with buyers flattening the 19 micron forward curve by bidding just under cash (1276 cents) through the spring and early summer. The discount further out has tightened, with bidding pegged at 1245 cents (-2.5 percent) from November through to April 2021. Prices further out into the start of the 2020/21 season have been varied, but are holding up above 1200 cents.
The forward market traded 66 tonnes for the week, all focused on the 19 micron index, with maturities split evenly in the later half of 2020 and post-Easter 2021.
Forward prices were generally concentrated in a narrow range. August, September and October all traded at 1265 cents and April/May 2021 trading at 1245 cents. November 2021 traded at 1238 cents, showing the value of growers having a level in the market when spot prices are so volatile.
Although the next three weeks will be devoid of open cry auctions, we expect some opportunities will still be available for growers over the recess on the forward market. Exporters will still be looking to keep their books balanced and demand will still rely on the macro drivers centred around global health outcomes.
Valuing certainty over the fear of lost opportunity seems more relevant now than ever.
Indicative forward levels
19 micron 21 micron
Aug/Sept 1265 cents 1170 cents
Oct 1265 cents 1165 cents
Nov 1245 cents 1145 cents
Dec/ Jan 1245 cents 1140 cents
Feb/April 1245 cents 1140 cents
May/June 1230 cents 1130 cents
Trade summary this week
August 19 micron 1265 cents 5.5 tonnes
September 19 micron 1265 cents 20 tonnes
October 19 micron 1265 cents 5 tonnes
November 19 micron 1230/40 cents 4 tonnes
April 19 micron 1245 cents 5 tonnes
May 2021 19 micron 1245 cents 25 tonnes
Nov 2021 19 micron 1238 cents 2 tonnes
Total 66.5 tonnes