Southern Aurora Markets partner Mike Avery.

“Risk comes from not knowing what you are doing. Risk management is what separates traders from gamblers.” – Warren Buffet

IT was another odd week for forward wool trading while the auction market remains becalmed.

The AWEX EMI closed 1 cent down for the week, with almost all micron groups recovering the ground lost Wednesday.

The medium Merinos faired best, posting gains while crossbreds continue to give back the hard-earned gains of October.

The forward market again traded lightly, with only 19 micron in the prompt window trading flat to cash. The market is suffering from almost a complete lack of offering in the forwards. This appears a little incongruous in isolation.

The very low passed-in rate would point to growers reluctantly accepting these levels against a backdrop of even more confronting prices in the livestock sector. The bid side of the market is also thin, but some indication can be deduced.

The current spot level for 19 micron is 1390 cents. The forward market is currently bidding 1375 cents for prompt, raising to around 1390/1400 cents in the early New Year and peaking at 1410 cents in February. Bidding is again light for the remainder of the season, falling back to 1360 cents.

Interest in the 2024/25 season is now limited to March through to July at 1470 cents – a 6 percent premium to spot.

With the spot market dominated by “just in time” buying we are likely to see this range trading continue governed by the fluctuating USD and inconsistent demand signals. This will likely bring intermittent opportunities for growers to hedge as exporters and traders look to balance their forward books in the challenging global conditions.

This week’s trades

November 2023 19 micron                                           1375/1385 cents              10 tonnes

Total 10 tonnes