THE forward wool market opened a little hesitantly this week, with the backdrop of the Chinese New Year expected to lead to a slow in demand.
While volumes were moderate levels rose as the week progressed, autumn levels lifted and established new benchmarks with 19 microns trading at 2250 cents and 21 microns at 2200 cents.
There was light trading in the spring, but at a discount of 150-170 cents to the spot market. This reflects the high risk that the forward market sees at current levels.
The impact of demand destruction is yet to come into play as tight supply is keeping any potential price trend reversal in check. Even at the discount, the trading levels in the spring represent a price band in the 85 to 90 percent range for the last four years.
Processors seem to be unwilling to price much quantity above the lows of last summer that saw 19 microns at 2100 cents and 21 microns at 2050 cents. Even at these levels, processors are unable to find significant garment orders. Grower hedge volumes remain low, with traders making up 40 percent of the sell side this week.
We expect to see interest at similar levels next week, with the possibility of better pre-Easter bidding as exporters look to cover some risk.
19 micron March 2250 cents 15 tonnes
19 micron April 2250 cents 5 tonnes
19 micron Nov 2125 cents 5 tonnes
20 micron March 2255 cents 2.5 tonnes
20 micron May 2185 cents 5 tonnes
21 micron March 2200 cents 5 tonnes
21 micron April 2200 cents 15 tonnes
21 micron May 2160/2180 cents 4.5 tonnes
21 micron June 2170 cents 5 tonnes
28 micron Oct 2080 cents 7 tonnes
Total 69 tonnes
Projected forward trading levels for next week
Month 19 micron c/kg 21 micron c/kg
Feb 2260 2210
March 2250 2200
Apr/May 2230 2190
June/July 2210 2165
Aug/Sept 2140 2090
Oct/Dec 2130 2080
Jan/Feb 2060 1980