July 2, 2022
  • July 2, 2022

Solid wool auction results boost futures traders

By on May 13, 2022 0

Mike Avery, partner of Southern Aurora Markets.

MOST wool micron groups rose 1-2% in another strong week at wool auctions, creating some interest in futures trading.

Cross wool prices rose 4%, coming off their lows as the weakness in the Australian dollar continues to boost the market in general.

As mentioned last week, the wool market tends to be influenced but not governed by currency movements. The graph below illustrates this.

The rapid rise in 2010/2011 came against a 10% rise in the Australian dollar and the subsequent fall was hardly attributed to the currency’s neutral movement. This pattern prevailed throughout the decade.

The current price situation has wools finer than 19 microns reaching four and five year highs this week. This bought out some of the activity nearby, with producers happy to lock in good levels and exporters happy to cover some short selling boosted by the uptrend.

Overall, futures prices improved a bit and volumes improved slightly. Buyers were looking to buy in May/June close to spot. Spring and summer buying levels remain a bit hesitant, with the 19 micron contract firmly anchored at the recent high of 1700 cents. The larger 21 micron contract attracted interest at 1325 cents – a new high for August – but buyers stubbornly resisted opportunities offered by producers in September and October at 1330 cents and 1340 cents respectively. With the 21.0 micron contract historically offering the best value, this could likely change if the current trend continues.

Futures Trading Levels Expected Next Week

19 MPG 21 MPG

May to July 2022 1720/1740 cents 1320/1340 cents

August to December 2022 1690/1700 cents 1310/1320 cents

January to July 2023 1690/1700 cents 1270/1300 cents

August to December 2023 1680/1700 cents 1280/1310 cents

This week’s talks

June 17 micron 2670 cents 5 tons

June 18 microns 2180 cents 5 tons

August 19 micron 1670 cents 15 tons

August 20 microns 1325 cents 10 tons

September 19 micron 1700 cents 20 tons

November 19.5 microns 1525 cents 5 tons

January 2023 19 microns 1700 cents 5 tons

October 2023 21 microns 1295 cents 10 tons

Total 75 tons