Sparse forward wool trading as Merino values firm

Michael Avery, Southern Aurora Markets partner, January 21, 2022

FORWARD wool markets were again sparsely traded this week as the auction market reverted to the familiar pattern of taking a breather after a rally.

As evidenced in the chart below, all Merino qualities are at, or near, the season peaks.

The 17.5 and finer finished the week on their high, but the coarser qualities came off slightly from Tuesday’s peaks. Crossbreds remain range bound at the lower levels.

Forward grower offers were focused on the finer end of the market, with buyers again selective. Levels remained at or at a slight premium to cash. Maturity ranged from prompt to early Spring, delivering a relatively flat curve.

We expect the same demand signals on the forwards next week, with interest on the buy side particularly on the 19 micron through to mid-2023. Grower longer term hedging is more apparent on the superfines, with offers out to April 2023. This seems a sound strategy with current levels sitting in the 80 to 90th percentile of prices for the last decade.

This week trades

February 28 micron                                                         430 cents                         5 tonnes

April 17 micron                                                               2460 cents                        5 tonnes

April 19 micron                                                               1720 cents                        2.5 tonnes

May 19 micron                                                               1725 cents                         3.5 tonnes

Sept 19 micron                                                               1700 cents                         6 tonnes

October 19 micron                                                        1725 cents                        2.5 tonnes

Total 24.5 tonnes


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