Wool forward markets hold ground despite spot auction losses

Michael Avery, Southern Aurora Markets, May 4, 2018

FORWARD markets held their ground this week while all micron groups posted losses at auction, though they were minor compared to the volatility of the previous months.

Crossbreds fell for the first time in three months as they reached levels closer to their historical relationship to the Merinos.

The forward markets held their ground with modest volumes going through mainly focused on the spring. The August 21 micron forward index traded at 1840-1855 cents and in September at 1820-1840 cents. These levels are 15-20 percent above the last year’s auction averages. In August 2017, the 21 Micron Price Guide average was 1600 cents and in September it was 1550 cents. The October 21 micron forward traded at 1740 cents, 12 percent above the October 2017 spot market level.

Demand forward on the 19 micron index is a little more cautious at the current outright levels. Bidding in August was around 1950 cents and in September 1930 cents. This represents an increase of around 5pc on last August’s average of 1860 cents. In September the increase is a little better, with 1930 cents being 7pc about the AWEX 19 MPG average of 1800 cents.

Crossbreds traded 28 microns at 840 cents for November — a rise of 12pc on their November average for 2017. The challenge remains in getting meaningful volumes from the selling side to maintain exporter and processor interest in delivering fair value pricing for growers, enabling them to adequately manage the volatility and risk they constantly face. The 37.5 tonnes traded this week represents less than 1pc of the volume presented for auction.

Anticipated levels next week

Month                                 19 micron                           21 micron

May                                     2030 cents                         1930 cents

June                                     2030 cents                         1920 cents

July                                      1970 cents                         1880 cents

Aug                                      1950 cents                         1850 cents

Sept                                     1930 cents                         1830 cents

Trade summary

May                      18 micron            2295 cents              2.5 tonnes

August                  18 micron            2195 cents              2 tonnes

August                  18.5 micron        2060 cents              4 tonnes

August                  21 micron            1840/1855 cents   12.5 tonnes

September          21 micron           1820/1840 cents   12.5 tonnes

October               21 micron             1740 cents                2 tonnes

November           28 micron                840 cents                2 tonnes

Total 37.5 tons


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