IT was a positive week in the spot auctions and an interesting week in the forward market.
The auction market posted its fifth consecutive day of gains albeit steady rather than spectacular.
A sound opening to the week, helped by a strong US dollar, was a little underwhelming on early expectations.
It was pleasing that the strong spot market continued into the close, with finer Merinos gaining 20 to 30 cents and medium Merinos 5 to 15 cents.
The forwards traded strongly to start the week with 21 micron trading at 1350 cents for March 2022 (plus 30 to the spot). Lack of volume on the offer forced buyers to the finer microns, which traded at a premium to cash out to October 2022.
Buyers generally remain frustrated by inaction on the sell side. Growers seem unconcerned or unaware of the current volatility that is dogging most commodity markets.
The forward curve remains flat to a slight premium to June 2023. The turnover of the forwards remains modest at best around 1 percent of the underlying market. The flat curve and low turnover would point to a general optimism in price direction. This is in some ways contrary to the continuing low (6.9pc) passed in rate.
The final sales of the year next week will be around 40,000 bales. Hopefully, we will see a solid finish to year most will be happy to see the back of. There is a variety of opinions on how we will open the New Year. With just three weeks of sales in January before the Chinese New Year, the direction of the market will likely pivot on the opening demand. Positive sentiment next week could provide growers with opportunities to defray some risk for 2022.
This week’s trades
January 19 micron 1650 cents 2.5 tonnes
January 21 micron 1310 cents 5 tonnes
March 17 micron 2440 cents 5 tonnes
March 21 micron 1350 cents 6 tonnes
April 17 micron 2435 cents 5 tonnes
May 17 micron 2405/2440 cents 10 tonnes
May 18 micron 2050 cents 5 tonnes
Oct 19 micron 1680 cents 5 tonnes
Total 43.5 tonnes