Southern Aurora Markets partner Mike Avery.
“When you’re at the end of your rope, tie a knot and hold on.” — Theodore Roosevelt
IT was an interesting week on the spot wool market, with a shaky start and a stronger US dollar that could give little or no support to Merino quantities.
The western selling centre was the exception, coming off a lower base price to rise about one percent on Tuesday.
This was an indication of what would prevail Wednesday, with prices lifting and returning to last week’s levels. All in all, it was a solid result considering the dark clouds that were gathering offshore.
The forward markets rolled along with trades confined to the nearby window of April through to June. Prices were executed at a slight discount to cash as exporters and growers alike looked to roll positions forward and decrease some exposure.
Uncertainty in markets drives volatility. Uncertainty prevailed ahead of the Trump Government announcement on tariffs. How this would play out was difficult to predict. The reality was as broad as it was erratic. Early signs are concerning, with stock and commodity markets down 3-5 percent. What lies ahead and the impact on the wool market is changeable. Consumer confidence will certainly be dented. How our key trading partners will react is unknown and how the US will respond to the wave of criticism is even more arbitrary.
Supply will remain tight, so hopefully wool prices will fare better than others. Cotton is limited and down (300pt/around 5pc) overnight.
Unpredicted events that disrupt markets are known as “black swan” events. With the benefit of hindsight maybe we should have seen this one coming.
To quote British historian Simon Schama: “Global economic crashes have been caused by a variety of problems, some more unavoidable than others, but this is the first one ever to be brought about by sheer doltish stupidity.”
Trades this week
19 micron June 1555 cents 5 tonnes
21 micron April 1482 cents 10 tonnes
21 micron May 1485 cents 10 tonnes
HAVE YOUR SAY