Hellish

Wool Market Update 23rd June

If you’re going through hell, keep going.” – Winston Churchill

Another hellish week for the spot market. Falls were consistent across all merino fleece with declines of 3 to 5% for the second week in a row. Demand, or lack of it, was again the key driver. The world economic outlook as still clouded at best leading to a lack of consumer confidence.

Price charts indicate that we have broken through medium term support levels these last two weeks. This is not uncommon markets to overreach and a bounce still a possibility. The forward markets were again confined to trades in 2024 with June, July and August executed at 1520 early in the week and again at 1500 after auction close for the 19.0 MPG. This represents a significant premium to Wednesdays close of 1418.

The prompt window and the spring remains uninviting to buyers with no clear signals coming from the offshore processors. Concerns endure as economic conditions in Europe remain poor and anticipated Chinese stimulus likely to be underwhelming.

The best bids in the forwards are now out to Spring and Summer of 2024 and into 2025. The chances of a short-term bounce appear to be diminishing with just three more selling weeks until the mid-year break. With macro indicators and momentum against the market any bounce should be viewed as an opportunity to place some hedges.

With most micron categories breaking or sitting on long term support levels predicting the short and medium direction of the market is proving problematic. Current lack of bidding levels into the new season indicates the lack signals coming from offshore. We will likely need to see stability in the spot market before any confident bidding and offering returns to the forwards. In the meantime, the premiums bid in 2024/25 provides the only hedge opportunities.