Wool EMI con­tin­ues to drop 21c/kg

Warwick Daily News - South West Queensland Rural Weekly - - Livestock - — By Mike Av­ery South­ern Aurora Mar­kets, Wool

THE spot auc­tion mar­ket con­tin­ued its steady de­cline with the Eastern Mar­ket In­di­ca­tor drop­ping 21 cents/kg this week and the in­dex record­ing a loss for the eighth con­sec­u­tive trad­ing day (the first time since June

2015).

The for­ward mar­kets opened the week with bid­ding sta­ble and held as the week pro­gressed.

Grow­ers re­mained re­luc­tant to en­ter the mar­ket or set tar­get lev­els. Lit­tle guid­ance was com­ing from off­shore with our ma­jor con­sumer, China, in the mid­dle of their “Golden Week” fes­ti­val.

Con­sumer ac­tiv­ity in this hol­i­day week pro­vides a guide for the lo­cal Chi­nese pro­ces­sors of short-term de­mand and over­all con­fi­dence.

A weaker AUD Thurs­day saw buy­ers take a lit­tle cover above cash for Novem­ber

(19.0 mi­cron at 2350c/kg and

21.0 at 2200c/kg) and raise their bid­ding lev­els through to Christ­mas and be­yond.

Ac­tiv­ity on the for­ward mar­kets has fallen to be­low

1 per cent of the un­der­lin­ing clip for the last two months, at a time when record prices were be­ing set in the auc­tion and for­ward lev­els into 2019 were be­ing of­fered at the 90th per­centile of prices for the last year.

While the mar­ket ap­pears to be look­ing to find a level, volatil­ity will most likely be com­mon for the fore­see­able fu­ture.

Tight sup­ply will def­i­nitely be a fac­tor go­ing for­ward but fluc­tu­at­ing de­mand at these price points and gen­eral un­cer­tainty in the global trade scene will have an im­pact.

For­ward pric­ing, out to May

2019, is ex­pected to lift prior to the open­ing of auc­tion.

Hope­fully this will pro­vide good hedg­ing lev­els for grow­ers and al­low ex­porters to en­gage more con­fi­dently with the down­stream pro­ces­sors.

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