Wool exporters’ hesitance to build stocks filters into forward market

Michael Avery, Southern Aurora Wool, July 14, 2017

THE auction market closed irregularly this week, with exporters filling orders prior to the mid-year break, but unwilling to stock at these levels.

This attitude filtered into the forwards, with interest focused on the front months.

The 19 micron index traded at 1755 cents, which is near the peak traded forward level. The 21 micron index again traded strongly in August, with all traded above the record 1500-cent level set over the last two weeks.

It will be critical to see if interest can be maintained during the recess, as exporters weigh up the likely impact to prices and we move into the higher supply spring. Currently exporters are pricing a 2 percent discount into August, a 5pc discount into September and 7-8pc as we move towards the end of the year.

It is important to note that the discount off the current spot would still place prices at the highest spring levels ever.

Anticipated forward levels next week

August             19 micron    1750-1800 cents      21 micron    1485-1510 cents

September      19 micron    1720-1755 cents      21 micron    1420-1440 cents

October           19 micron     1690-1720 cents      21 micron   1400-1420 cents

Trade summary

Mid August         21 micron    1510/1525 cents     25 tonnes

End August         21 micron    1505 cents                10 tonnes

End September  19 micron    1755 cents                  5 tonnes

Total 40 tons

Source: Southern Aurora Wool.

Get Sheep Central's news headlines emailed to you -