Wool Market Reports

Light forward trading as black swans swamp wool industry

Michael Avery, Southern Aurora Markets partner, March 2, 2020

IN risk language, an unforeseeable disturbance is termed a ‘black swan’ event and this year has delivered the wool industry a bank of swans.

With global markets floundering while trying gauge the potential impact on supply chains and general economic health of the coronavirus, the wool industry was disrupted by having auction sales cancelled due to a cyber attack on software provider Talman.

Forwards traded lightly as growers and traders re-evaluated hedge levels. Wool particularly, and apparel fibres in general have been relative flat although volatile since Christmas. This week has been the tipping point for cotton coming of 10 percent.

A strong wool market was anticipated this week, off the back of logistic improvements with workers in China returning to the wharves and factories. The shortage of stock in China was seen to outweigh the general economic malaise.

On the forward markets, exporters were still wary but bidding up to cash out to May. The lack of offers in the new season continues to blunt price discovery into the spring. Light trading in the autumn started the week with 21 micron trading at cash for March and April as some growers looked for insurance in these volatile times.

The delay of auction sales to Wednesday and subsequent cancellation focused buyers attention to the more pressing matters. What lies ahead for next week is anyone’s guess.

If sales can be mounted in an orderly fashion and wool moves through the pipeline, we would anticipate renewed exporter interest. If not, buyers will logically factor in further risk into their prices and discount further.

What is certain is that industry leaders need present a unified intent to find a solution to mitigate the risk of future disruptions to the flow of wool through supply chain.

Trade summary

March 21 micron                              1790 cents              3 tonnes

March 28 micron                               860 cents              5 tonnes

April 21 micron                                  1790 cents             3 tonnes

May 21 micron                                   1770 cents              5 tonnes

Total 16 tonnes


Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.


Get Sheep Central's news headlines emailed to you -