Southern Aurora Markets partner Mike Avery.

THE spot wool market took a breath last week after 11 straight auction sessions that lifted the AWEX Eastern Market Indicator from 1180 to 1251c/kg clean.

Demand remains tepid and a slight shift in supply led to most of the Merino sector of the market lose a little ground.

The forward market reacted as you would expect. Buyers became a little less keen with the spring premiums on the fine wools disappearing after the auction start on Tuesday. Sellers came of the fence especially on the medium wools with offers in the medium-term window discounted slightly to the peak of last week.

Spring forward sellers of 21 micron are now targeting the 1500-cent level. This looks a sound strategy. Since the impact of COVID-19 the 1500-cent barrier has only been breached twice. The first time was for four selling days in February 2023. The second being the peak of 1508 cents last week at auction and this week’s slip back to 1502 cents. Hopefully, the retraction will be minimal, and a base will be formed off which the market can regain momentum. That said, some insurance at an historically positive level is a sensible policy.

Trades this week were restricted to the finer microns with the 19 micron contract executed for May and June at 10 and 20-cent premiums to cash.

Next week will see the steady, albeit below average, supply hit the market with 41,000 bales on offer. Tight supply at the medium end of the market has seen the continued contraction of the basis to the finer wools.

The 20 and 21 micron price guides have converged and the difference between 19.5 and 21 micron (the key China micron types) contracting to under 50 cents. Strange but not unprecedented days.

Source – Southern Aurora Markets.