IT was another very solid week at the spot auction market with the 19 micron Micron Price Guide breaching 2200 cents and the 21 micron MPG 2100 cents.

This saw the forward markets react in synchronisation with 19 microns traded to 2030 cents in September out to December at 1950 cents. The August 21 micron index peaked at 1955 cents.

With new record levels being set each week, buyers are increasingly wary of building stocks into the spring. With no confirmation from off shore that the momentum can be sustained, the risk from the buy side is high, leading to the significant discounts to spot levels.

More importantly the outright price trading is now 10 to 20 percent above last spring auction levels.

2017 auction levels (peak forward trades in brackets)

Month                  19 micron                                          21 micron

August                  1870 cents                                        1600 cents (1955)

September          1800 cents (2030)                            1550 cents (1890)

October               1880 cents (1955)                            1560 cents (1860)

November           1990 cents (1960)                            1630 cents

Conversely growers are hesitant to commit to discounts of 8 to 10% below cash to hedge forward on a market than has risen for two years.

Activity this week indicates that growers, particularly those that have little or no hedges in place, are putting more weight on the outright level and the guaranteed return then the discount to spot. Pleasingly options traded again this week with the focus on lower strike prices to keep the premiums as low as possible in this volatile environment.

Anticipated levels next week

Month                                                19 micron                           21 micron

May                                                    2200 cents                         2070 cents

June                                                    2170 cents                         2030 cents

July                                                     2120 cents                         2000 cents

Aug                                                     2070 cents                         1960 cents

Sept                                                    2040 cents                         1910 cents

Oct                                                      1970 cents                         1870 cents

Nov                                                     1960 cents                         1850 cents

Trade summary

May                      19 micron                          2200 cents                                        5.5 tonnes

June                      19 micron                           2160 cents                                        5 tonnes

June                      21 micron                           2005 cents                                        2 tonnes

July                       19 micron      Put option 2050 cents strike 50 premium       2.5 tonnes

August                  21 micron                            1900/1955 cents                          12.5 tonnes

September          19 micron                           2010/2030 cents                             7 tonnes

September          19 micron       Put option 1950 cents strike 45 premium   2.5 tonnes

September          21 micron                           1880/1890 cents                             7.5 tonnes

October               19 micron                           1945/1955 cents                             4.5 tonnes

October               21 micron                           1860 cents                                       5 tonnes

November           18 micron                           2195 cents                                       2 tonnes

November           19 micron                           1960 cents                                       2.5 tonnes

December           19 micron                            1950 cents                                       2 tonnes

Total 61 tonnes