Planning for good fortunes

Wool Market Update 19th July 2024

“Good fortune is what happens when opportunity meets with planning.” – Thomas Edison 

The spot market struggled to find a level as we move closer to the mid-year recess. After opening a little weaker Tuesday most merino qualities found support and finished the week relatively unchanged. The auction continues to be dominated by the indent operators. Traders and exporters are still battling with limited demand and forward orders into the spring.

The forward market remains unexceptional with only modest activity again this week. There continues to be intermittent action in the early part of the new season but generally with little depth in both bid and offer. As has been the case for the last twelve months the majority of activity has been stimulated from the buy side. Sellers have either been unwilling to commit forward or have been unaware of the opportunities. The 19.0 contract traded flat to cash for late August 2024 (1350). Interest was there from both buyer and seller, on other microns, in the early spring but unable to find common ground. Buyers were looking for a slight discount and were unmoved by the solid close Wednesday. Sellers were reluctant to shift from the modest premiums they were looking for with most microns in the lower quartile of their historic ranges. Spring and Summer of 2025 again traded at 1500 for 19.0 microns (150 cent premium to spot) highlighting the awareness of the value of certainty to the counterparts.

It remains a difficult time for the wool pipeline. Costs continue to increase whether it be on farm, the logistic pipeline, or the processor. While consumer confidence remains low and the geopolitical landscape turbulent it is the time to develop risk management plans for when opportunities do arise.