Against the wind

When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.” — Henry Ford

Not even the tight supply situation could hold up the spot market which once again drifted on the exchange rate. A move in the AUD of one percent stronger against the USD related almost precisely to fall in prices in the sale room. History indicates that this relationship only holds when the market has no direction. This is certainly where we find ourselves now. General uncertainty prevails across most commodities at present with forward business difficult to eke out. The spot wool auction remains dominated by just in time buying.

The forward market continues to struggle although bidding at a slight discount to spot levels has begun to reappear in the nearby months and spring. Buyers appear to be looking for some hedge cover around key levels (19.0 at 1500 and 21.0 at 1400). Volumes remain limited.

It is difficult to see and major shift in direction of the market while ambiguity remains around trade and tariffs. Tight supply might moderate the decline but a change in consumer confidence is needed to boost demand.

Traded today

19.0     July     1495 (cash 1497)

21.0     Aug     1420 (cash 1417)

21.0     Sept     1420

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