SENTIMENT improved in the forward trading of Australian wool this week as the auction market looked to find a level.

The spot wool auction market started the week listlessly, recording losses over the first two days.

There was little confidence shown over the Easter and Chinese holiday break and this translated to the Merino qualities continuing to lose ground, as they had done for nine of the last 10 auction days dating back to the beginning of March.

Sentiment improved in the forward market late Wednesday as the market looked to find a level. Solid bidding on the forwards led to the 21 micron contract in May trading close to cash and triggering renewed interest in the spring and beyond.

Although the market still has a forward discount from an historical position the hedging strategy taken by sellers this week looks sound.

The 18 micron index traded at 2200c/kg clean for August 2018. This compares to the AWEX 18 micron MPG position in August 2015 of 1470c/kg, 1533c/kg in 2016 and 2150c/kg in 2017.

The 19 micron index traded at 1980c/kg for June 2018. This compares the AWEX 19 micron MPG position in June 2015 of 1484c/kg, of 1475c/kg in 2016 and 1860c/kg in 2017.

The 21 micron index traded at 1710c/kg for September 2018, compared to the AWEX 21 micron MPG position in September 2015 of 1290c/kg, 1550c/kg in 2016 and 1413c/kg in 2017.

Trading interest pushed out to June 2019 with 21 micron trading at 1600c/kg.

The spot auction closed Thursday strongly with Merino qualities retracing most of the losses of earlier in the week to finish unchanged on last Thursday. Crossbreds maintained their momentum of the last month, gaining another 30 cents this week.

Anticipated levels next week

Month                                                19 micron                           21 micron

April                                                    2000 cents                         1865 cents

May                                                     1990 cents                          1865 cents

June                                                    1980 cents                          1830 cents

July                                                     1950 cents                           1770 cents

Aug                                                      1900 cents                          1730 cents

Sept                                                     1850 cents                           1710 cents

Trade summary

May 2018                           21 micron            1850/1865 cents               12.5 tonnes

May                                     22 micron            1795 cents                            4 tonnes

June                                     19 micron            1980 cents                        20 tonnes

July                                      19 micron            1920/1950 cents                9 tonnes

July                                      21 micron             1780/1800 cents               4.5 tonnes

August                                 18 micron            2200 cents                        10 tonnes

August                                 19 micron            1900 cents                           9 tonnes

September                         21 micron            1710 cents                             2.5 tonnes

June 2019                           21 micron            1600 cents                         10 tonnes

Total 81.5 tonnes