IT was another week of uncertainty in the wool forward and spot price markets.
We head into the last round of sales before the three-week recess with buyers and sellers reticent to commit.
Buyers are unable to find any clear signals from the downstream processors. Outright sellers are not prepared to short the market at the risk discount buyers are asking at the historically high spot prices.
Highlights of the week were August trading at 1500 cents and above and the hedge setting of the 21 micron index out to September 2018.
Only a small percentage of growers seem to place sufficient value on the certainty of price protection into the future, even though they would be hedging and locking in significant margins.
The current monthly hedge open position both outright and options as a percent of the monthly offering:
August 2017 281 tonnes 1.9pc
September 285 tonnes 1.2pc
October 138 tonnes 0.8pc
November 77 tonnes 0.3pc
December 29 tonnes 0.2pc
January 18 micron 40 tonnes 0.2pc
There appears at present to be little weight given to the value of certainty over the fear of lost opportunity.
We expect next week’s auction to continue the same pattern, with a slight easing of prices into the recess.
Anticipated forward levels next week
August 19 micron 1750 to 1800 cents
21 micron 1485 to 1500 cents
September 19 micron 1715 to 1750 cents
21 micron 1410 to 1430 cents
October 19 micron 1690 to 1715 cents
21 micron 1400 to 1410 cents
August 21 micron 1500/1505 cents 12.5 tonnes
October 19 micron 1715 cents 5 tonnes
September 2018 21 micron 1350 cents 14 tonnes
Total 31.5 tonnes
Source: Southern Aurora Wool.