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

Trading levels

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