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.

Trade summary

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