WOOL forward markets remain constricted last week, with buyers and sellers looking for direction.
The established pattern of the last three to four years of medium to long prices rallies followed by short sharp falls seems to be broken. The spot market edged down throughout March as the balance between supply and demand shifted slightly, with offshore clients needing some relief.
Export numbers for February were down 12 percent and 16pc lower year-on-year. This is roughly in line with the estimated reduction in production. With quality and quantity likely to vary from week to week we could see a bit more volatility, but a continued easing trend.
Exporters are still finding it difficult to get forward commitments from processors at levels approaching spot prices. The lack of grower offering into the spring is hampering price discovery signals. Strong spring hedging levels achieved during the market rally in February indicated a strong base level going forward – 19 microns, 2225-2260 cents and 21 microns, 2100-2150 cents.
The spot market has lost around 100 cents since those peaks, but grower offering levels remain unchanged to higher and attracting little interest.
We anticipate trade interest to remain solid through to June at modest discounts to cash and spring interest to return at slightly reduced levels. The indicative interest at 19 microns is 2150-2200 cents and for 21 microns, 2050-2100 cents.
21 micron April 2285 cents 5 tonnes
28 micron May 1090 cents 5 tonnes
Total 10 tonnes
Projected forward trading levels for next week
Month 19 micron c/kg 21 micron c/kg
April 2270 cents 2220 cents
May 2240 cents 2200 cents
June/July 2220 cents 2200 cents
Aug/Sept 2170 cents 2090 cents
Oct/Nov 2140 cents 2080 cents
Dec/Jan 2110 cents 2030 cents
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