Southern Aurora Markets partner Mike Avery.

A SOLID week at Australia’s wool auctions has led to most Merino fleece microns have risen 30 to 40 cents.

The cheaper Australian dollar that did little for the market last week was given the credit for this week’s rise.

That theory could be tested with the dollar falling, rising and falling 2 percent on three consecutive days to finish where it started.

Whether this will further shake the confidence of exporters and processes that is already being tested by logistical and policy issues that are limiting consumer access is yet to be seen.

The forward markets by contrast have been relatively stable. Activity is mixed across the time frames. The short-term window has been relatively active around flat to a slight premium to cash with exporters looking to lock in margins for their short-term sales and growers wanting to add a little certainty in a generally risky landscape.

The medium-term view of the forward market is a little more bearish with the early spring trading at a discount for 19 micron contract, but a little closer to cash for the 21 micron contract.

The general feeling is that exporters and processors alike require a bit of motivation, by way of discount, to take on the current risk that the increased Spring supply will bring while the pipeline still comes to terms with the persistent challenges of transport delays, cost hikes and lockdowns.

We expect next week will deliver similar outcomes. There should be opportunities for growers to hedge in the May/June window at solid levels as buyers look to lock in margins in the ever-changing market conditions. A further lift in prices could trigger some further hedging activity in Spring, but will need to be reasonable to meet current grower levels.

This week’s trades

April 19 micron                                                 1700 cents                        10 tonnes

May 19 micron                                                1690 cents                           5 tonnes

May 21 micron                                                1325 cents                           3 tonnes

June 20 micron                                                1405 cents                           7 tonnes

June 21 micron                                                1325 cents                           5 tonnes

July 17 micron                                                 2585 cents                           2 tonnes

Aug 21 micron                                                 1325 cents                           5 tonnes

Sept 19 micron                                                1670 cents                        15 tonnes

Sept 21 micron                                                1295 cents                           2 tonnes

Total 52 tonnes

Anticipated wool forward levels