FORWARD wool markets held their ground despite another difficult week for the wool market and commodities in general.

Fundamentals were again out the window with focus on major exporters’ currency fluctuations and the back and forth rhetoric between China and the USA.

Tariff increases on Australian barley and suspensions on some beef exports dominated local headlines.

The spot auction performed poorly with the finer wools most affected. The AWEX 19 micron index lost 50 cents for the week and 21 micron 20 cents.

Forwards tended to hold their ground with the spring discount to spot continuing to tighten (see charts below), but in light trading. The 19 micron contract that traded late last week at 1350 cents found continued bidding support into the spring at 1315/1320 cents, but saw no follow up grower selling interest to entice buyers to bid up. The 21 micron contract traded out to November at 1260 cents, but remained bid over at that level, even as the spot auction weakened to close at 1269 cents.

We expect interest to remain on the buy side as the forward curve continues to flatten. With limited forward orders into the spring and buyers’ willingness to factor no forward risk, even at these historically lower levels, it is difficult to see the curve move into premium.

Early indications are that some selling interest will return to the market at around 1340 cents for 19 micron and 1280 cents for 21 micron. Whether this will stimulate better bidding is probably going to be influenced by general economic sentiment and the volume and nature of the twitter barrage.

Anticipated trading levels

19 micron                                           21 micron

May/June                                                                        1330 cents                                        1285 cents

July/Aug/Sept                                                                 1320 cents                                        1275 cents

Oct/Nov/Dec                                                                  1320 cents                                        1260 cents

Jan/Feb/Mar                                                                   1310 cents                                        1250 cents

Trade summary

June 21 micron                                                1285 cents                          5 tonnes

August 19 micron                                           1310 cents                         3 tonnes

October 19 micron                                          1315 cents                         5 tonnes

November 18 micron                                     1490 cents                         5 tonnes

November 19 micron                                     1350 cents                       10 tonnes

November 21 micron                                     1260 cents                          5 tonnes

December 19 micron                                     1350 cents                          2 tonnes

Total 35 tonnes