THERE was better participation in the forward wool market this week as the physical auctions had another topsy turvy week.
Forward market activity was restricted to the 21 micron index, with maturities spread from August to December. A total of 77 tonnes or about 620 bales was traded, with prices ranging from 2165 cents in August to 2050 cents in December.
These levels represent fair value considering the 21 micron index traded down to 2133 cents last week. Although below the peak spring hedging levels achieved in February this year which ranged between 2100-2150 cents, a price level of 2050 is in the 75 percentile band for the last four years.
Volatility will likely be our bed partner for the remainder of the season. Currently running at over 14 percent, the balance of low supply and sporadic demand will see marked fluctuations in prices over the coming weeks. This should give growers opportunities to set attractive forward levels.
To date less than 1pc of the volume anticipated to go through auction in the July to December period has been hedged forward. In the current high risk environment, it is an issue for the wellbeing of the whole pipeline to address.
Projected forward trading levels for next week
Month 19 micron 21 micron 28 micron
June 2180 cents 2160 cents 1100 cents
July 2180 cents 2160 cents 1100 cents
August/September 2180 cents 2160 cents 1100 cents
October/December 2100 cents 2080 cents 1000 cents
January/June 2020 2050 cents 1950 cents 930 cents
July/December 2020 2000 cents 1900 cents 850 cents
21 micron August 2080/2165 cents 20 tonnes
21 micron October 2070/2075 cents 21 tonnes
21 micron November 2050 cents 22 tonnes
21 micron December 2050 cents 14 tonnes
Total 77 tonnes
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