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.

Trade summary

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