News

Light forward wool trading at new levels

Michael Avery, Southern Aurora Markets partner, March 25, 2022

Southern Aurora Markets partner Mike Avery.

FREMANTLE’S wool sale on Thursday heralded a bellwether warning for the market, with the fatigue finally impacting across all microns at this week’s auctions.

Falls between 1 and 3 percent were evident, with most Merino qualities losing 30 cents for the week.

The forward markets were again lightly traded, but generally at the new spot levels. Trading was restricted to the front months as buyers looked to reset their new season bids as the spot market brushed aside recent support levels. The 19 micron and coarser were back to pre-Christmas levels.

The forward bidding returned in the latter part of the week, with buyers looking at a flat line forward around 1.5 to 2 percent under cash and all the way to December 2023. There is a bit more caution in the Spring of 2022.

The chart below illustrates the price movement across the last two and half years and the current forwards interest out to December 2023 which sits around 60 cents above the medium-term average.

We expect bid levels for modest volumes to be maintained next week as we don’t see issues around financing, supply chain logistics, and overall global tensions easing in the short-term.

This week’s trades

April 2022 21 micron                                                     1280 cents                        5 tonnes

May 2022 19 micron                                                     1680 cents                        5 tonnes

Total 10 tonnes

Source: Southern Aurora Markets

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