Light forward wool trading in uncertain market

Mike Avery, Southern Aurora Markets partner November 25, 2019

FORWARD bidding on wool remained consistent last week with a light volume traded at or around cash levels.

The wool auction market last week continued to be dominated by uncertainty and reactive to changes in sentiment.

The indent order flow into the spot market continues to be erratic and consistent forward sales are not forthcoming. The result was a weaker spot market that continues to look for direction.

Growers still seem to be reluctant to commit at these levels even with the curve flat out to March 2020. This is understandable with drought and fires to the front of everyone’s mind at present

Exporters were bidding 21 micron at last week’s close (1740 cents) early in the week, but fatigued by mid-week under the pressure of lack of demand pull and poor sentiment. A weaker than expected spot market saw some trade selling joining the light grower interest and February and March were executed at 1720 cents for 21 microns. This level still equates to more than $2000 per bale.

This week is likely to see exporters still prepared to take on some stocks at around the 1750-cent level for 19 micron and 1700 cents for 21 micron. Any move outside these band will likely come from outside influences.

Indicative trading levels for next week

19 micron                           21 micron

November                                        1750 cents                         1720 cents

December                                         1750 cents                         1720 cents

January/March                               1750 cents                         1720 cents

April/June                                        1720 cents                         1680 cents

Trade summary

February 21 micron                        1720/1745 cents                25 tonnes

March 21 micron                             1720 cents                             5 tonnes

Total 30 tonnes


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