WOOL growers seeking cover for next year’s clip should be heartened to see the 21 micron forwards market trade at 1350 cents into September 2018 this morning.

In a market that has been very volatile all year, it was pleasing to see the market trade into the spring of 2018.

Although the September 2018 trade of 21 microns at 1350 cents is a significant discount to the spot market, it represents the 75 percentile band of the last decade and is higher than the 21 micron index has reached in any September except for 2016 (and hopefully 2017).

The current roller coaster price has seen five directional changes in six months. We started the year at 1412 cents, then there was a rally to 1486 cents, a retraction to 1431 cents, a rally to 1509 cents and a deep retraction to 1363 cents. This was followed by a sustained rally to 1508 cents, a retraction to 1476 cents, a rally to 1538 cents, a retraction to 1477 cents, a strong rally to 1581 cents and we are now in a retraction phase sitting at 1545 cents.

It is very difficult for growers, exporters and processors to get their heads around this. After tight supply over the last few weeks, we move into the final two weeks of the season with higher than normal auction offerings. The challenge ahead is to manage the risk that presents as we move into the new season and higher supply through the spring.

Indicative forwards 21 micron

August         1460 cents
Sept              1420 cents
Oct                1410 cents
Nov               1400 cents
Dec                1390 cents
Jan                1390 cents
Feb                1380 cents
March           1370 cents
April              1360 cents
May/Sept     1350 cents

Source: Southern Aurora Wool.