A RELATIVELY stable week of wool auctions has delivered a better environment for the forward market, with trading activity through to June 2020.
Volumes tended to be light as buyers and sellers were wary of jumping the gun in a period of unprecedented volatility.
Buyers have been keen to cover nearby risk. This has led to some solid hedge levels in October with the 19 micron index trading at 1755 cents. Although 30 cents under cash, it is 200 cents over the low of two weeks ago of 1550 cents. These levels have carried along the curve, with November and December trading at 1720 cents through to March 2020 at 1700 cents. The 21 micron contract traded out to June 2020 at 1600 cents.
The escapades of the last two months have had a detrimental effect on all value chain partners, with indecision and uncertainty plaguing the market. One positive outcome has been the recognition that this level of risk and volatility is unsustainable and needs to be addressed. This starts at the farm gate, by providing the information on the available tools, their utilisation and function. Awareness, education and involvement further downstream would go a long way toward reducing volatility.
Hopefully, the Nanjing Conference this week will provide a strong platform for the market into the summer. We anticipate forward levels to firm slightly next week.
Indicative forward levels
19 micron 21 micron 28 micron
September 1770 cents 1680 cents 920 cents
October 1755 cents 1670 cents 900 cents
November 1735 cents 1650 cents 890 cents
December 1725 cents 1645 cents 870 cents
January/March 1710 cents 1635 cents 830 cents
April/June 1700 cents 1610 cents 800 cents
October 19 micron 1755 cents 5 tonnes
October 21 micron 1620 cents 10 tonnes
October 28 micron 900 cents 2.5 tonnes
November 19 micron 1720 cents 5 tonnes
December 19 micron 1710/1720 cents 8 tonnes
December 21 micron 1620 cents 5 tonnes
January 2020 21 micron 1630 cents 3 tonnes
March 2020 18 micron 1800 cents 5 tonnes
March 2020 19 micron 1700 cents 5 tonnes
May 2020 21 micron 1580 cents 5 tonnes
June 2020 21 micron 1600 cents 5 tonnes
Total 58.5 tonnes
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