By Nathan Denny | Source: Riemann, Mecardo
Activity on the wool forwards market remains muted with the current seasons supply challenges and the falling physical market. Overseas buyers are still graced by the Aussie dollar sitting at 70.8 US¢, the lowest level since 2016.
Relatively rare in the wool market is a forward curve in a state of contango, or when forward prices are sitting higher than spot prices. The curve is showing prices holding steady until the beginning of the new year, signalling that exporters are nervous about supply and willing to pay out at these prices levels for the coming months. Supply in Merino wool between the 20-25 microns have seen volumes of up to 60% less than this time last year. This has been the contributing factor driving up prices in current markets. Finer microns have seen a downward pressure put on their wool premiums due to an oversupply.
Last week 19 micron fibers saw two contracts being traded at 2,320¢ for October 2018. 21 micron wool saw two contracts traded at 2,150¢ and 2,165¢ for November 2018.
This week contract for 19 micron wool traded at 2,350¢ for November 2018, while 21 micron dealt at 2,200¢ for November.
No minimum price contracts traded this week.
Nathan Denny is a second year Marcus Oldham Agribusiness student currently undertaking his internship with Mecardo. He comes from the Southern Riverina, where his family produces cereals, rice and corn.
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