Strong forward wool trades out to April 2018

Michael Avery, Southern Aurora Wool,, January 20, 2017

IT was a volatile week for both the physical and the forward wool markets.

Opportunities appeared then vanished for buyer and seller as both sides questioned the momentum in the market. The early rally of the $A softened the tone from the outset, but good demand in the fine microns kept the interest and forward pricing up. This was highlighted by trades in the 18 micron contract at strong levels out to April 2018.

Demand on the broader qualities slowed and forward levels dropped significantly. The 21 micron contract traded to a high of 1450 cents in the early autumn and is now bid at around 1400 cents. Strong levels were achieved by growers with strategic GTC orders in the market through their brokers, with season highs in both 19 and 21 micron contracts.

The coming weeks will likely present challenges for buyers and sellers alike. Demand has been restricted by the rapid rise in prices, but supply is expected to disappoint. This will likely lead to a volatile market. The financial and currency markets are expecting the same volatility, with the hand-over of power this weekend in the United States.

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Trade summary

February   21 micron                          1450 cents                   7 tonnes

March        19 micron                          1730 cents                 10 tonnes

March        21 micron                          1430/45/50 cents     22.5 tonnes

March        21 micron    Put option 1440 strike 35 cents     10 tonnes

April           19 micron                         1660/1670 cents         5 tonnes

April           20 micron                         1527 cents                   2.5 tonnes

April           21 micron                          1437 cents                   5.5 tonnes

May            18 micron                          1775/1810 cents         9.5 tonnes

June           18 micron                          1750 cents                   7.5 tonnes

Oct             19 micron                           1580/1600 cents        9 tonnes

April 2018 18 micron                           1760 cents                  5 tonnes

Sept 2018  19 micron                           1520 cents                  2.5 tonnes

Total  96 tonnes


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