A hard struggle

Wool Market Update 20th October

“The best wisdom comes from the hardest struggles” – Xavier Rudd

A positive week for the spot auction in a season to date that has, in the main, struggled against the tide of poor demand, lack of confidence and increasing global tension. All merino micron groups have suffered losses between 6 to 9% since the start of the season with the superfine most effected. This week has seen all qualities gain ground with 18.0 to 19.5 gaining around 2%

The forwards, which have endured low turnover and interest throughout the decline, bounced back with solid bidding across the board. Growers for the most part have shunned the forwards during the downturn. Volumes have remained under 1% of auction turnover for the last 6 months as growers were reluctant to accept bids at discounts to the spot market. Bids this week have lifted to be level with cash out to the end of November. The only trades this week occurred in 21.0 micron which traded early, mid, and late November at 1325 (a 2% premium to cash).

There has been no follow up offering to test the resolve of buyers which. This seems counter intuitive considering the current global uncertainty and the mixed bag that seasonally generally delivers this time of year. In the last decade the market has fallen throughout November 4 times, been relatively unchanged 4 times and risen twice. Reluctance is understandable when looking at the long term charts which have prices in the 30 to 40 percentile range on particularly the finer wools. Still some nearby insurance could be handy.

Hopefully we will see buying levels remain strong next week and present opportunities for both buyers and sellers to hedge some risk.