WOOL volumes through the forward market increased this week as buyers looked to cover positions due to ongoing concerns of supply.
The auction market started strongly this week with indent operators keen to fill orders prior to the Chinese New Year. Crossbreds were in demand and this followed through into the forwards with 40 tonnes traded in the May/June window at solid levels, delivering excellent hedging opportunities. The 21 micron wools traded at season high records of 2190 cents into Easter.
The strong Australian dollar and continued modest demand saw interest in forwards taper off towards the end of the week with most Merino qualities losing ground into the auction close. We see this trend continuing in weeks to come as processors balance the need to keep machinery with the inability to pass the current price levels onto their downstream customers. Risk levels remain high and volatility will be the constant.
We anticipate that the market will be under pressure next week with Chinese New Year capping demand as our biggest customer takes a pause. Trading on forwards should remain steady as buyers look to cover risk and keep exposure to the volatility to a minimum.
19 micron April 2230 cents 10 tonnes
19 micron May 2230 cents 10 tonnes
19 micron Oct 2140 cents 5 tonnes
19 micron Nov 2128 cents 5 tonnes
20 micron Feb 2255 cents 5 tonnes
21 micron March 2190 cents 5 tonnes
21 micron April 2185/90 cents 20 tonnes
21 micron Oct 2060 cents 2 tonnes
28 micron May 950/960 cents 30 tonnes
28 micron June 970 cents 10 tonnes
19 micron April put strike 2200 cents premium 50 2.5 tonnes
Total 104.5 tonnes
Month 19 micron c/kg 21 micron c/kg
Feb 2250 2180
March 2230 2180
Apr/May 2220 2175
June/July 2180 2150
Aug/Sept 2140 2060
Oct/Dec 2140 2050
Jan/Feb 2060 1980