FORWARD wool trading was again sparse this week, as the spot auction market closed for the Easter break still uncertain of direction.
Having looked to find a base Tuesday, with most qualities lifting, the majority eased into Wednesday on the vagaries of selection and a stronger Australian dollar.
There was very little interest from forward sellers in the medium term leading into the season close. Growers and exporters are uncertain of the impact of diminishing supply and equally muted demand. Buyers were looking to cover and the 21 micron contract traded at cash early in the week (2250 cents for June).
Most interest from the forward selling side was focused on longer term hedging. With crossbred prices at record levels, growers were able to get cover at the 90th percentile and above for 28 micron out 12 months. December traded at 1010 cents and March 2020 at 995 cents.
On the Merino qualities, exporters and processors continue to bid the near term steadily even with the current down trend holding. Selection risk is still evident, maintaining interest levels near cash out to June. Spring and summer levels are discounted 100 to 150 cents, equating where new long term export business can be written. The 19 micron contract traded to June 2020 at 2150 cents. From an historical point of view, this is in the top 10 percent of prices for the last decade. Taking a more recent view, it is in the top 25pc of prices for the last four years of price data.
We expect interest to remain steady on the forwards next week in the absence of spot auctions. Volume will be determined by the offshore demand over the recess.
19 micron June 2020 2150 cents 5 tonnes
21 micron June 2019 2250 cents 5 tonnes
28 micron December 2019 1010 cents 10 tonnes
28 micron March 2020 995 cents 16 tonnes
Total 36 tonnes
Projected forward trading levels for next week
Month 19 micron 21 micron 28 micron
May 2265 cents 2150 cents 1100 cents
June 2265 cents 2140 cents 1100 cents
July/Aug/Sept 2170 cents 2050 cents 1100 cents
Oct/Nov/Dec 2160 cents 2020 cents 1040 cents
Jan/March 2020 2150 cents 2000 cents 990 cents
Apr/June 2020 2140 cents 2000 cents 930 cents
Jul/Dec 2020 2140 cents 1970 cents 900 cents
Source: Southern Aurora Markets.
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