INCREASED volumes of wool went through the forward markets this week as risk mitigation was at the forefront of everyone’s mind.

Global markets reacted with increased volatility to rising Twitter-induced tension in the China/USA trade talks.

Wool in particular had a mixed bag this week. Recently released export data showed improved volumes for March, leading to a steadying of the year to date decline to 13.7 percent. This is roughly in line with the production fall estimates. China took 80pc of the exports for the month, highlighting the importance of the current trade talks.

Near and medium demand remains poor at these current price levels leading to most Merino qualities coming off 20 to 30 cents this week at auction.

Forwards traded briskly, with trades across most microns and maturities out to February 2021. The main focus was on the spring of 2020 and autumn 2021 where 85 tonnes traded between 2125 and 2155 cents in the 19 micron category. Fair value seemed to be achieved with growers wanting certainty of return for up to two years, out at attractive margin levels. The 2155 cent mark equates to the 75pc price level of the last four years and the 90pc level for the decade. Processors likewise are looking for some certainty of price to combat the volatility of recent times.

With demand remaining poor, we expect spot prices to continue to ease, but tempered by the tight supply. The weekly offering is projected at 30,000-34,000 bales for the next month. Forward markets will likely follow suite and weaken slightly. Opportunities in the spring and into 2020 are likely present again next week and will be influenced by global market sentiment.

Trade summary

18 micron June 2019                                      2340 cents           3 tonnes

19 micron July 2019                                       2245 cents            5 tonnes

June 2020                                     2150 cents            5 tonnes

July 2020                                      2155 cents           10 tonnes

Oct 2020                                       2155 cents           10 tonnes

Nov 2020                                      2125 cents           10 tonnes

Jan/Mar 2021                              2155 cents           30 tonnes

Apr/Jun 2021                              2155 cents            20 tonnes

21 micron June 2019                                     2250/60 cents     19 tonnes

Aug 2019                                      2240 cents             7.5 tonnes

Nov 2019                                       2125 cents            14 tonnes

28 micron June 2019                                     1250 cents              5 tonnes

Oct 2019                                       1070/1110 cents   10 tonnes

Feb 2021                                          935 cents                5 tonnes

30 micron Aug 2019                                          900 cents              5 tonnes

Total 158.5 tonnes

Projected forward trading levels for next week

Month                                 19 micron                           21 micron                           28 micron

May                                      2245 cents                         2250 cents                         1250 cents

June                                      2245 cents                         2250 cents                         1250 cents

July/Aug/Sept                    2200 cents                         2150 cents                         1100 cents

Oct/Nov/Dec                      2150 cents                         2100 cents                         1050 cents

Jan/Mar 2020                    2140 cents                         2080 cents                            990 cents

April/June 2020                2130 cents                         2000 cents                            930 cents

July/Dec 2020                    2125 cents                         1970 cents                            900 cents