VOLATILITY has been the constant partner of the wool market this last twelve months and this was no more evident than during last week.
The AWEX 19 micron price guide (MPG) that had fallen 366 cents from its late August peaks and 21 micron MPG that had fallen 303 cents, both rebounded about 100 cents.
This relief rally should deliver some positive opportunities for hedging into next year. Bidding on the forwards started strongly and continue to gain momentum as the auction confirmed that the base that started to form last week had been confirmed.
The 19 micron levels for the New Year lifted to trade at 2100 cents out to May and bid to 2130 cents for January and February. Grower enquiry improved, but only 45 tonnes was traded for the week, has yet to convert into traded volumes. We anticipate, with only three trading weeks to recess, that the market should hold these gains through to the New Year.
Hedging levels for 19 micron should remain over 2100 cents through to May/June. Longer term bidding, into the spring and summer of 2019, has lifted with 19 micron trading in November at 1960 cents, up 30 cents on last week.
The value of setting targets for such longer date hedging is borne out by the range of trades for the 19 micron MPG. Over the last six months, the range was 1900 to 2105 cents (see graph below). The peak trade (2105 cents) was made on 10 August, when the 19 micron MPG was 2310 cents.
The MPG peaked at 2462 a week later, but travelled in that 2350 to 2450 cent rantge out until 10 October. Unfortunately, the next trade was early November at 1980 cents and by then the index had fallen to 2100 cents.
The interest in the crossbreds continued with both 28 and 30 microns bid over cash early in the week and trading at 710 cents for 30 micron.
19 micron January 2060 cents 5 tonnes
19 micron March 2000 cents 2.5 tonnes
19 micron May 2100 cents 10 tonnes
19 micron October 2019 1950 cents 10 tonnes
19 micron November 2019 1960 cents 5 tonnes
21 micron February 2100 cents 5 tonnes
21 micron May 2050 cents 2.5 tonnes
30 micron February 710 cents 5 tonnes
Total 45 tonnes
Projected forward trading levels for this week
Month 19 micron c/kg 21 micron c/kg
Nov 2190 2140
Dec 2150 2120
Jan 2140 2100
Feb 2140 2100
March 2110 2060
April/May 2100 2050
June/July 2050 2000
Aug/Dec 1970 1920