IT was another disappointing week for the spot auction market, with most Merino qualities easing by 80 cents.

The forward market traded in a wide range, but in line with the cash market. Growers were able to hedge prior to the auction at what looked like modest discounts for 18 micron of 1200 cents, for 19 micron at 1060 cents and for 30 micron at 380 cents, but this proved 40-60 cents over cash by the week’s end.

Post-sale activity improved Thursday. Bidding was tentative early, but under better competition saw levels rise to within 15-20 cents of cash, leading to 15 tonnes being traded in the 19 micron index at 975 cents for October and at 980 cents for November. Spring and early summer closed on a reasonably positive note bid for 19 micron at 970 cents and for 21 micron at 870 cents when considering the magnitude of the falls this week.

We expect this bidding activity to continue into the early part of next week. Exporters and processors seem to trying to keep a tight and balance book with volatility like to with us for some time. This will likely create opportunities for growers to hedge nearly flat to cash out to the Christmas recess.

A chart for uncharted waters. 19.0 micron volatility over the last 40 years

Trade summary

September 21 micron                                           875/945 cents              23 tonnes

October 19 micron                                                950/975 cents              15 tonnes

October 21 micron                                                850/925 cents              15 tonnes

November 19 micron                                                     980 cents                  5 tonnes

January 2021 19 micron                                              1060 cents              10 tonnes

March 2021 30 micron                                                   380 cents                5 tonnes

April 2021 18 micron                                                     1200 cents                5 tonnes

TOTAL                                                                                                                78 tonnes

Indicative trading levels next week

19 micron                           21 micron

Sept/Oct                                                                          970 cents                            870 cents

Nov/Dec                                                                          980 cents                            870 cents

Jan/February                                                                  930 cents                            850 cents

Mar/April                                                                         920 cents                            820 cents

May/June                                                                        920 cents                            820 cents