Southern Aurora Markets partner Mike Avery.
“History repeats itself, first as tragedy, second as farce” – Karl Marx
THE spot auction wool market wailed against the trend of other commodity and financial markets and the farce that is the geopolitical circus, to post gains across all microns this week.
The AWEX Eastern Market Indicator has steadily risen for the eight consecutive sessions reaching 1242 cents, its highest point since May 2023.
Medium microns are touching levels rarely seen since COVID. The 21 micron index peaked at 1489 cents on Wednesday as it nudged its way towards the top of the range (1500 cents) that has held for all but two weeks in the last five years.
The forwards were a little more active as buyers and sellers tried to wrangle with the competing influences of tight supply versus the impact of a potential global tariff war. The focus was on the spring, with trades being executed at a premium in the finer wools and flat to a slight discount for the medium wools.
The 19.5 micron contract traded November and December at 1570 cents (spot 1532 cents). The 21 micron contract traded at 1475 cents (spot 1483 cents).
While tight supply is a lock, the uncertainty around demand is escalating with tit for tat reactions from the key manufacturing and consumer countries rarely out of the headlines. Buyers continue to look for forward cover to balance the books. This will result in opportunities for growers to hedge.
Forward levels for next will likely start a little under spot for the nearby window (April to June) as processors digest the rise of the last few weeks. Spring bidding is at a premium for fine wools (19 micron 1575cents), reflecting the tight basis to the medium wools. A more cautious approach is likely on the 21 micron contract. Buyers are likely to re-engage at similar levels to this week’s trades.
Trades this week
19.5 micron September 1465/75 cents 9 tonnes
21 micron November 1570 cents 5 tonnes
21 micron December 1570 cents 5 tonnes
Source – Southern Aurora Markets
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