Lack of demand signals puts pressure on auction and forward prices

Michael Avery, Southern Aurora Wool June 2, 2017

THE market struggled at auction and in the front months of the forwards as a lack of offshore demand signals, particularly in the finer wools, put continued pressure on prices.

Although most fine wools have lost 150 cents over the last fortnight, they are only back to pre-Easter levels, 200 cents above the start of the year and up to 500 cents above the same time last year. This partial explains the reluctance of buyers into the spring and the discounts to spot.

The 19 micron index traded from 1478 to 1567 cents from August through to the end of October, averaging 1514 cents. Forward interest for those month is holding around 1700 cents.

The picture on the 21 micron index is a little different. The price range throughout the season has been quite wide (1350-1538 cents) and volatility has been high. Supply pressure has held prices above 1400 cents for most of the season and it is trading at a slight discount to spot out to July (1455-1470 cents). The spring levels have held well in comparison to the fine wools, with the key 1400-cent level trading again this week.

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Anticipated levels next week

June/July                19 micron  1770-1800 cents    21 micron  1460-1475 cents

August                     19 micron  1720-1750 cents    21 micron  1400-1405 cents

September              19 micron  1700-1740 cents    21 micron  1390-1400 cents

October                   19 micron  1670-1700 cents    21 micron  1370-1390 cents

Trade summary

June                          19 micron  1840/1850 cents    7 tonnes

June                          21 micron  1470 cents             10 tonnes

July                            19 micron  1800 cents               3.5 tonnes

July                            20 micron  1540 cents               5 tonnes

Sept                           21 micron  1400 cents            10 tonnes

Total  35.5 tons


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