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
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