IT was a challenging week for the physical wool auction and forward markets.

The auction market dropped around 50 cents for the week, however; the forward market was a little slower to react, with some sellers being able to achieve strong levels out to May.

The 19 micron was traded from March to May between 2090 and 2110 cents. The cash indicator closed at 2093 cents.

Crossbred growers were hedged February and March at 800/810 cents, well ahead of the 28 indicator that finished the week at 736 cents.

This week the falls, although significant, can’t be looked at in isolation. Most qualities have just returned to their Christmas closing levels. The exceptions being 21 microns, which are still 30 cents above their close and the crossbreds (28 and 30 micron) which have lost 50 cents.

More importantly to remember is that this time last year prices were 350 to 400 cents lower for Merino qualities.

Growers hedging into the late autumn and even into the spring will be looking at levels still in the 90th percentile for prices over the last two years. Consideration needs to be placed on the value of certainty against the fear of missed opportunity.

Some interest has been shown by growers on options. Current volatility and momentum has pushed the premiums up and the strikes down. Exporters have been unwilling to accept the current risk of capping their upside benefit and leaving the downside exposed at these historically high levels

Anticipated trading levels

Micron                                  19 micron             21 micron

Feb                                        2050 cents           1740 cents

March                                   2050 cents           1725 cents

April                                       2040 cents           1720 cents

May                                       2030 cents            1710 cents

June                                      2010 cents            1700 cents

Trade summary

February                              28 micron            810 cents                             10 tonnes

March                                   19 micron            2070/2105 cents               12 tonnes

March                                   19.5 micron         2005 cents                             5 tonnes

March                                   21 micron            1750 cents                              6 tonnes

March                                   28 micron              800 cents                          10 tonnes

April                                       19 micron            2110 cents                             5 tonnes

April                                       21 micron            1735/1750 cents              14.5 tonnes

May                                       19 micron            2090 cents                             6 tonnes

Total 68.5 tons