Better activity for wool market

THERE was better activity on the forwards throughout February with around 300t traded forward.

The spot market gained ground over the month but has lost ground to start March.

Volume was even spread with 170 tons traded in March to June, 70t October through to December and another 70t in the spring of 2020.

The key merino micron price guides (19 and 21) rose 150 cents from the new year, opening to the end of February as the spectre of tight supply overrode the erosion in demand.

January export numbers recovered but still lag to be 17 per cent down on the previous year.

Market momentum faded and by mid-March has given back 90 to 100 cents.

That said all micron price guides are still above the 85-percentile band based on the last four years of data.

The forward market remains in discount but is still indicating good levels for wool into the spring and new year.

Prices remain in the 85 to 90 percentile band for March and April, dropping to the 75 to 85 band as we head into the later part of the year.

Guaranteeing a minimum price for a portion of the clip at these levels seems to be a good start for a hedging strategy.

The current data and charts point to the volatility being a constant companion in the market.

This volatility is making it extremely challenging along the pipeline.

While growers are generally benefiting from the high price levels, the variability is disrupting orderly flows along the chain, creating a high-risk environment and eroding confidence.

We have obtained this price structure by a combination of demand creation and supply decline.