WOOL forward trading was virtually becalmed this week as financial markets went onto negative territory.
Sentiment seems to be the driver as the seemingly endless chopping and changing with better near-term and poor longer-term prediction flipped to the reverse.
Ag commodities in general seem to be bearing the brunt.
The spot auction in wool is holding well against these head winds. All microns were at least stable for the week with fine Merinos stronger early before levelling into Thursday.
Forward market trading was restricted to the prompt window. Both 19 micron and 21 micron traded for February maturity at around a one percent discount to spot, at 1670 cents and 1430 cents respectively.
Slightly better grower participation came in when the spot auction started to lose momentum.
Exporters continue to report difficulty in converting better demand signals into concrete business at the current spot levels. Whether this is a product of timing or price is yet to play out. The looming Lunar New Year holidays and subsequent mass travel will test China’s progress through their Covid challenge. Many processors are wary of the short and medium impact on labour and logistics.
The chart below tracks the path of 21 micron since the recovery from the pandemic onset. We are seeing a steady improvement albeit within significant ranges. This has drawn initial grower hedging interest relatively flat to cash for late winter into spring. How buyers react will be thought provoking. Currently the risk landscape would likely indicate they would require more incentive.
With 46,000 bales on offer next week we expect further settling of prices with buyer interest maintained in the prompt window.
Trades this week
Feb 19 micron 1670 cents 5 tonnes
Feb 21 micron 1430 cents 5 tonnes
Total 31 tonnes