WOOL’S spot auction market finally succumbed to the pressure of a strong Australian dollar and high price levels, impacting forward trading levels.
The auction market has been on a steady and at times strong, rising trajectory, since the end of September, putting funding pressure on exporters and processors alike. All Merino microns 18 microns through to 22 microns fell 20 cents.
Forward markets traded steadily early in the week at anticipated levels with 19 micron reaching a high of 2140 cents and 21 micron hitting 1760 cents. Forward prices held during Tuesday and into Wednesday, but the falls in the spot market began to impact the forward levels particularly into the late autumn.
Bidding interest remains, but at slightly cautionary levels. Exporters are still looking to manage their risk as volatility is expected to continue throughout the year. We expect opportunities for growers to hedge, particularly in the Autumn window, to still be there, but possibly on restricted volumes.
Anticipated trading levels
Micron 19 micron 21 micron
Feb 2100 cents 1750 cents
March 2100 cents 1730 cents
April 2080 cents 1720 cents
May 2060 cents 1710 cents
June 2040 cents 1700 cents
March 19 micron 2135/2140 cents 18 tonnes
April 19 micron 2115/2125 cents 5 tonnes
April 20 micron 1930 cents 17.5 tonnes
April 21 micron 1750/1760 cents 12.5 tonnes
May 19 micron 2100 cents 2 tonnes
May 19.5 micron 2025 cents 5 tonnes
May 21 micron 1720 cents 2.5 tonnes
July 18 micron Put option, 2050 strike, 30 cents premium 5 tonnes
Total 67.5 tonnes
Source: Southern Aurora Markets.
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