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
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
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