STRONG moves were recorded in the wool forward market early last week on anticipation the spot auctions would continue to rebound from Easter lows.

April, May and June forwards all traded at a premium to cash on Monday and Tuesday. The spot auction market delivered, setting a new high in 21 microns and retracting much of the March losses in 18 and 19 microns. The strong tone continued into the close Thursday.

Brisk buying by exporters in the forwards, with 19 micron peaking at 2070 cents for June and 1940 cents for 21 micron, slowed a little Thursday. More importantly, traders seized the opportunity to sell at these new highs as new demand was yet to be confirmed.

The strength in the front months has translated to better interest in the spring and into the New Year. Exporters are hesitant to set long positions too far forward but are looking for opportunities to create trades into the spring if they can partly hedge their sales.

Selling depth into the spring and summer remains an issue for the forward markets. The decision for growers is not being made any easier with current volatility and prices. The value of guaranteeing returns at historical highs is clouded by the seemingly relentless, but welcomed, momentum in prices. The risk of demand destruction remains, although somewhat balanced in the short term by supply.

Other risks, whether it be currency, political or unknown, remain in place. Developing a strategy to mitigate these risks and manage margin should be paramount when the market is at these levels and maintaining momentum.

Anticipated levels next week

Micron                                                              19 micron                            21 micron

April                                                                   2075 cents                          1940 cents

May                                                                   2060 cents                          1930 cents

June                                                                   2050 cents                          1920 cents

July                                                                    2000 cents                          1870 cents

Aug                                                                    1950 cents                          1775 cents

Sept                                                                   1930 cents                          1760 cents

Trade summary

April                                     19 micron                           2050 cents                          2 tonnes

May                                     21 micron                           1900/1930 cents              7.5 tonnes

June                                     19 micron                           2060/2070 cents            25 tonnes

June                                     21 micron                           1910/1940 cents            22.5 tonnes

July                                      19 micron                           1950 cents                         5 tonnes

July                                      21 micron                           1810 cents                         2 tonnes

August                                 18 micron                           2200 cents                         10 tonnes

October                              21 micron                           1730 cents                         10 tonnes

March 2019                       17 micron                            2200 cents                          5 tonnes

Total 89 tons