Southern Aurora Markets partner Mike Avery.

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