FORWARD wool trading stabilised this week as the physical auction market steadied after weeks of volatility.
It was a different sort of week for the wool market and for once we don’t have to talk about volatility.
The spot auction market remained steady, with a slightly weaker bias influenced by a strengthening Australian dollar against the US currency.
The AWEX Eastern market Indicator has traded unchanged at US845 cents for the latest three auction days. This is something we haven’t seen all season and rarely in the last two years. The Australian dollar seems to be heading higher in the short to medium term at least against US currency.
The forwards have also remained stable for the last two weeks’ trading, with 19 micron at 1365/1370 cents out to February 2021. The range for the month has been 1320 to 1425 cents, so we seem to be settling at the mid-point at the moment. Current bidding supports this, with light volume on the bid for 19 micron at 1370 cents throughout January and February.
Sellers appear to be lining up just above the high point of the recent trading range. December offered 1445 cents, January 1430 cents, and February 1430 cents out to May at 1450 cents.
We move into the last three weeks of auction sales for 2020 with everyone happy to see the back end of a year that delivered challenges on every front. Traditionally the spot wool market has a slight stronger leaning in December, as processors stock for the three-week recess. This year has taught us to expect the unexpected.
We expect hedging opportunities early in the week at cash from 18 micron through to 21 micron in January and February. Exporters and processors will probably need stronger demand signals before shifting outside the current tight range.
Indicative trading levels next week
19 micron 21 micron
December 1370 cents 1170 cents
January/February 1370 cents 1120 cents
March/April 1320 cents 1120 cents
May/June 1320 cents 1120 cents
This week’s trades
December 21 micron 1170 cents 10 tonnes
January 19 micron 1370 cents 5 tonnes
January 21 micron 1170 cents 5 tonnes
TOTAL 20 tonnes