“A pessimist sees the difficulty in every opportunity. An optimist sees the opportunity in every difficulty” – Winston Churchill
AUSTRALIA’S wool auction market continued its rally despite the strong Australian dollar and forward marketing improved.
Most Merino fleece qualities gained three percent during the week’s physical auctions, while the crossbred and carding categories remained relatively flat.
The forward market fared slightly better, with trading restricted to the 19 micron and 21 micron categories.
Grower patience was rewarded with forwards executed flat to cash for late November and December at levels not seen since the start of the season. The 19 micron contract traded to 1455 cents and the 21 micron contract traded to 1355 cents.
In general, volumes on the bid and the offer continue to disappoint. At least on the bid side, levels are there, particularly in the prompt window and out into the first quarter of 2024. Better depth is required to give confidence to these levels, but at this point bidding is relatively flat to the newly established auction prices. Little indication is currently coming from the sell side.
With three weeks to run, the Christmas recess time will tell if the rally can be sustained. In general, the market finds it hard to hold a rally past the five solid sessions we have experienced over the last three weeks.
The pending recess may play a part sustaining the rally but only if demand can be maintain. If so, we may see New Year hedging levels that growers could find acceptable to offset some risk.
This week’s trades
November 2023 19 micron 1450 cents 10 tonnes
November 2023 21 micron 1350 cents 10 tonnes
December 2023 19 micron 1455 cents 5 tonnes
December 2023 21 micron 1355 cents 5 tonnes
April 2024 21 micron 1340 cents 10 tonnes
Total 40 tonnes
Source – Southern Aurora Markets.