AUSTRALIA’S wool auction market had another strong week, with low supply pushing Merino qualities higher and forward price discounts being offset by the tight supplies.
Crossbreds reached record levels as processors looked to cheaper alternatives to feed their machinery.
Forward wool contract price levels traded higher as exporters looked to cover some risk even with their processor clients claiming that current levels are unsustainable.
Wool volumes were again light this week with growers only committing modest volumes. The forward discounts that the market is requesting, due to the lack of demand, is continually offset by the tight supply. This conundrum has hampered the market through the extended rise in prices. That said forward trade levels reached new highs with 19 micron contracts executed at 2285 cents for March through to 2240 cents for May.
Pleasingly, interest lifted in the spring and summer. The 19 micron contract traded at 2125 cents early in the week and bidding lifted to 2150 cents as processors looked to shore up some inventory. We expect to see interest at similar levels next week with continued demand in the pre-Easter as exporters look to cover short-term risk.
We are hoping that interest in the Spring and Summer remains, as this is when the potential and more significant risk lies for growers. Setting hedging targets based around the managing of return margins will be key in what we expect to be a volatile year in the commodity landscape.
18 micron June 2350 cents 3 tonnes
19 micron March 2250/2285 cents 17.5 tonnes
19 micron April 2250 cents 3 tonnes
19 micron May 2240 cents 7.5 tonnes
19 micron Nov 2125 cents 4 tonnes
19 micron Dec 2125 cents 3 tonnes
19 micron Jan 2020/2085 cents 2 tonnes
21 micron April 2200/2220 cents 20 tonnes
28 micron May 975 cents 10 tonnes
Total 70 tonnes
Month 19 micron c/kg 21 micron c/kg
Feb 2300 cents 2260 cents
March 2285 cents 2240 cents
Apr/May 2270 cents 2220 cents
June/July 2230 cents 2170 cents
Aug/Sept 2180 cents 2100 cents
Oct/Dec 2160 cents 2080 cents
Jan/Feb 2130 cents 2040 cents