FORWARD wool markets opened after the Easter recess, bidding well on the back of a weaker Australian dollar.

This confidence translated into a stronger auction market in $A terms (AWEX EMI up 17 cents to 1960c/kg), but down in $US terms (US EMI down 22 cents).

Most evident in the spot market was the lack of participation of the usually dominant Chinese indent buyers. Demand is still sluggish and medium term off shore confidence is low. This is leading to the spring still being discounted and nearby months flat to cash.

Grower selling is only sporadic, with the ongoing drought and production concerns clouding forward strategy decision making. The 21 micron contract traded for June at 2250 cents near cash (2260 cents) and in October at 2125 cents. This spring discount still places the price in the 80th percentile range of the last four years and reflects the current long-term view of the processors.

We expect forward levels to remain solid, with trading volumes again light. Sellers remain focused on the discount to cash rather than the outright level. Buyers are unable to commit to levels that the processors and consumers are still finding unpalatable. Evaluation of fair value remains difficult with the low drought-induced supply balance the demand destruction that is inevitable with continued high prices.

Increased forward flows will only come when both sides of the market value certainty above the fear of lost opportunity.

Trade summary

21 micron June                                 2250 cents            5 tonnes

21 micron October                          2125 cents          14 tonnes

Total 19 tonnes

Projected forward trading levels for next week

Month                                                19 micron            21 micron            28 micron

May                                                    2265 cents          2250 cents          1200 cents

June                                                    2265 cents          2250 cents          1200 cents

July/Aug/Sept                                   2220 cents          2150 cents          1100 cents

Oct/Nov/Dec                                    2180 cents          2100 cents          1050 cents

Jan/March 2020                               2150 cents          2080 cents           990 cents

April/June 2020                 2140 cents          2000 cents            930 cents

July/Dec 2020                                   2100 cents          1970 cents            900 cents