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Merino wool prices, except for the very fine micron categories, continue to drift along. Crossbred prices also continue to drift, at very low levels. This article takes a look at where apparel fibre prices are generally.

It is six months since Mecardo last looked at apparel fibre prices (read here), with the conclusion at the time that the apparel fibre complex was waiting for improved economic news to underpin better demand and through that higher price. Not a lot has changed.

One of the challenges in seeking a wider perspective on wool prices by looking at other apparel fibre prices is reconciling different price levels and varying correlations between fibre prices. The traditional method of looking at wool price ratios to say cotton or polyester staple fibre can tell us if wool is relatively over or underpriced but does not tell us much about how prices have moved, as wool prices tend to drive the change in ratios. In September the average merino price was compared to a non-wool staple fibre series (NWSF), which is a weighted average price of the main non-wool staple fibres (cotton, polyester, acrylic and viscose). We use that again in this article.

Figure 1 shows the year-on-year change (3-month smoothed) for the average Merino price at Australian auctions from 2005 to February 2023 and for the NWSF in US dollar terms. In this schematic, we are simply looking at the rolling yearly change in Merino (roundly 18.5-19.5 micron for this period) and the NWSF series. Figure 1 shows the two series basically follow similar cycles and trends, occasionally getting away from each other (such as the Merino price doing better in 2018-2019 or worse in 2022). That is no surprise as merino wool is well embedded within the apparel fibre complex. In the current market, the NWSF is performing slightly better by this measure than Merino but there is not a lot of difference.

In Figure 2 the exercise is repeated in Australian dollar terms. The correlation breaks down somewhat when the Australian dollar is included, reflecting its role as a shock absorber for the economy and economic shocks are what tend to drive wool prices.

Returning to Figure 1 the major downturn in apparel prices during the past two decades is clearly shown; 2009, the period after 2011, 2015, 2019 into 2020 and 2023. We continue to move through the latest cyclical downturn.

What does it mean?

Apparel fibre prices continue to work their way through a major cyclical downturn, which accords with some of the major economies being in recession. The fact that merino prices, in the main, are trading at relatively low price levels should then be no surprise. By the nature of cycles, downturns eventually are superseded by cyclical upturns, and when that happens apparel prices, including wool, will get a lift in demand hence price.

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Key Points

  • Apparel fibres are continuing to work their way through a cyclical downturn.
  • Change in the merino price has a closer (positive) correlation to change in the NWSF in US dollar terms than in Australian dollar terms.
  • The NWSF has fallen substantially since 2022 in a similar manner to Merino prices.

Click on figure to expand

Click on figure to expand

Data sources: Emerging Textiles, Fibre Year, AWEX, RBA, ICS, Mecardo

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