A tale of two Tuesdays
Wool Forward Market Report 17 Feb 2023
A week appears to be a long time in the commodity markets these days. Last week confidence was at a high and we saw the EMI post it’s highest one day gain (44 cents) for eighteen months on Tuesday. This translated into substantial gains in the key 19.0 and 21.0 indices that put on 62 cents and 71 cents respectively.
These gains stimulated the forward markets with trading last week and early this week through the resistance levels on both 19.0 and 21.0. Growers obtained hedge levels on 21.0 microns (March 1475 and July 1430) not seen since early 2020. This highlighted the value of growers setting target forward levels to take advantage of rallies in the spot auction.
A week down the track confidence disappeared along with buying interest in physical offer boards and forwards. Sellers snapped up the remaining solid bids on the forward markets. Tuesday saw the EMI off 23 cents, 19.0 49 cents and 21.0 34 cents. Technical analysts are now looking at whether we are seeing at a retraction in the rally that has held since November last year or merely a short-term inability of the market to withstand the increase flow onto the physical market.
The test will come again next week with 57,000 bales again rostered for sale. Current bidding on the forwards is muted and not help by the current lack of grower offering. On a brighter note, bidding for 19.0 micron remains solid throughout 2024 and 2025 slightly above the average for the last two years at 1670.
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