BIDDING on the forward wool market followed the spot auctions last week as physical sales started in a positive vein and gathered momentum into the close.
With the absence of any changes to global economic and health fundamentals, a short-term increase in wool demand seems to be driving prices.
Bidding in the forwards followed a similar pattern. Buyers took out any offers near cash to start the week and lifting limits in line with the across the board increases of 40 to 80 cents in all Merino categories.
The forward curve is now flat to Christmas and showing a slight carry into the New Year. This now presents significant food for thought to growers, farm advisors and brokers who have not witnessed such market dynamics for a number of seasons.
Careful examination of risk profiles and cost of production should now be undertaken with a target to set introductory hedge levels. In the current environment, it is impossible to predict to magnitude and length of the current rally. Buyers’ limits in the forwards are yet to be properly tested, with not offering in the market within 100 cents of cash on the close.
We expect bidding to remain solid until confirmation or otherwise of the current rally through more offshore demand and follow through on next Tuesday’s auction.
October 19 micron 1055 cents 5 tonnes
October 19.5 micron 1010 cents 5 tonnes
January 19 micron 1005/1085 cents 5 tonnes
TOTAL 15 tonnes
Indicative trading levels next week
19 micron 21 micron
September/October 1070 cents 960 cents
November/December 1060 cents 960 cents
January/February 1075 cents 970 cents
March/April 1075 cents 970 cents
May/June 1075 cents 970 cents