IT was an interesting week on the auction and the forward markets.

After more than 20 auction days of gains, most Merino qualities gave ground into the week’s close. The forward markets finished the week on a cautious note after posting strong hedging levels into June/July and out until the spring.

Post-Easter the 21 micron contract traded to a new high of 1455 cents on Tuesday before closing yesterday down 30 cents, mirroring the auction decline. New season bids held up well and although we expect some easing in levels through next week, we are hopeful sound hedging opportunities will prevail.

We expect interest to hold on the 21 contract through May and June at around 1420 cents, easing to 1380 cents into the early Spring and 1360 cents into the end of the year. The 19 micron contract levels are 1750 cents in August, but fall away to 1700 cents in September and to 1650 into the end of the year.

Trade summary

May           21 micron             1455 cents                     5 tonnes

June           18 micron             2070 cents                 16 tonnes

June           19 micron             1800/1810 cents        9 tonnes

July             19 micron            1800 cents                  10 tonnes

July             18.5 Put Option 1880 strike 40 cent premium   4 tonnes

Aug             21 Put Option 1450 strike 55 cent premium      5 tonnes

Sept            19 micron            1725 cents                   10 tonnes

Sept            21 micron            1400 cents                  14 tonnes

Oct              21 micron            1380/1390 cents        4.5 tonnes

Nov             19 micron            1700 cents                  12.5 tonnes

Nov             21 micron            1390 cents                  20 tonnes

Dec             18 micron            1850 cents                      2 tonnes

Jan              19 micron            1675 cents                      5 tonnes

Total                                                                                  117 tonnes

Source: Southern Aurora Wool.