MARKET sentiment underwent a complete turnaround in the physical auction and forward sectors this week.
The grower interest in the post-Christmas period that we saw last week, evaporated early in the week following the positive spot auction close last Thursday.
Trading was restricted to the nearby months of November and December, with exporters and processors dominating the selling. November opened the week trading at 2240 cents, but was sold down to 2180 cents on the close. We expect bidding to be cautionary, as traders weigh up the extent of the demand reduction bought on by the sustained high prices of the first two months of the new season, the ongoing trade war tension and the stubbornly firm Australian Dollar.
Volatility will remain as the only constant. Opportunities should arise for buyers and sellers as the balance of supply and demand fluctuates. The lack of consistency in the volume of bids and offers on the forward market reflects the under valuing of price certainty right along the wool pipeline. This is at odds with most agricultural commodity forward markets showing higher volumes in current high risk landscape.
Trade summary
November 18 micron 2470 cents 5 tonnes
November 21 micron 2180/2240 cents 17 tonnes
December 18 micron 2450 cents 5 tonnes
December 21 micron 2185 cents 5 tonnes
Total 32 tonnes
Projected forward trading levels for next week
Month 19 micron c/kg 21 micron c/kg
Oct 2280 cents 2210 cents
Nov 2260 cents 2175 cents
Dec 2210 cents 2120 cents
Jan 2170 cents 2100 cents
Feb 2170 cents 2100 cents
May/June 2140 cents 2070 cents
July/Dec 2110 cents 2030 cents
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