FORWARD wool trading discounts have increased marginally with the market seeing spring supply outstripping demand.

The rollercoaster continued for the spot auction as dwindling demand and diminishing consumer confidence saw the market give back the majority of last week’s gains.

Modest volumes went through the forward markets with the majority of the action being trade focused. Exporters and processors were balancing their positions as growers tended to stay on the fence.

Forward trading levels still remained in the upper quartile (75 percent) of prices for the last four years. The 21 micron contract traded down to 2080c/kg for September and 2050 cents for October and November. Bidding fell away towards the end of the week, with closing spring levels dipping below 2000 cents.

We expect continued volatility in the spot market, with tight supply until the new season. Short-term rallies may provide some opportunities for growers to hedge.

We expect some activity in the September to December window around the 2040-cent level for 19 micron and 2000 cents for 21 micron.

The risk profile remains high. Global confidence continues to wane. While direct tariffs are yet to be placed on apparel goods, the current US-China trade war is impacting negatively on Chinese processors. Any easing of these tensions will help stabilise the forward market.

Projected forward trading levels for next week

Month                                                19 micron            21 micron            28 micron

June                                                    2130 cents          2100 cents          1080 cents

July                                                     2100 cents          2060 cents          1080 cents

Aug/Sept                                           2080 cents          2020 cents          1080 cents

Oct/Dec                                             2050 cents          1980 cents          1000 cents

Jan/June 2020                                  2000 cents          1930 cents            930 cents

Jul/Dec 2020                                     1950 cents          1900 cents            850 cents

Trade summary

19 micron August                            2180 cents                           5 tonnes

21 micron September                     2080/2120 cents               15 tonnes

21 micron October                          2050 cents                           7 tonnes

21 micron November                      2050/2075 cents               21 tonnes

28 micron August                            1100/1130 cents                10 tonnes

Total 58 tonnes