Wool Market Reports

Forward wool trading follows auction market momentum

Michael Avery, Southern Aurora Markets partner, September 21, 2020

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.

Trade summary

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


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