It wasn’t the warmest of welcomes for the wool market after the winter recess with the Eastern Market Indicator (EMI) losing 11¢ to 1113¢/kg. Forecasts about likely declines in Australian wool production for the year ahead were unable to spring buyers back into action (for this week at least).
If we were
handing medals out for the roughest week back, gold would go to the Northern
Wool market. Despite a resilient Tuesday, the finer end lost ground Wednesday
as 17MPG lost 53¢ to
1639¢/kg for the week in Sydney. Melbourne was runner-up as the pass-in rate
reached double digits (12%) which took the edge off the softer market tone. The
Bronze medal went to the west where the 19.5 MPG was the sole improver this
week, increasing 7¢ to 1335¢/kg. The Western Market Indicator (WMI) lost 6¢ to
1248¢.
There has
been a lot of discussion on supply this week, in particular the latest estimate
from the Australian Wool Production Forecasting Committee (AWPFC). The wool
trade is not immune to the side effects of less-than-ideal seasonal conditions
in key sheep regions and elevated slaughter. We discussed the complexities of
the current domestic supply situation with the AWPFC chairman Stephen Hill on
this week’s episode of Commodity Conversations (listen
here). The August estimate from
AWPFC saw a reduction in forecast 2024/25 shorn wool production to 285mkg which
is a 10% decline from the 23/24 forecast.
The decline
in production is arguably beginning to rear its head at Auction already, with
the national offering this season (167K bales) 21% lower than the same time
last year. Unfortunately for those selling wool currently, easing supply hasn’t
been a silver bullet for the current demand situation.
The impact
of manufacturing confidence on demand was the focus of this week’s analysis
article from Andrew Woods (read
more here). Lagging economic growth
continues to be the wool market’s problem child as weak economic indicators out
of Germany and China continue to match low Merino prices. The Ifo Institute
expects growth in the Euro area to pick up in 2025 back to around 2022 levels
which should lend itself to some upward momentum in merino wool pricing (please
note, crystal ball gazing and economic forecasts should always be handled with
care).
Next week
On balance, the total offering size for next week is essentially the same (42K) but some steep changes in size across the three selling centres could make things interesting particularly in the North and out West.
Melbourne will sell Tuesday and Wednesday with a much larger offering expected, (almost 34% higher). Sydney will also sell Tuesday and Wednesday to an offering of 11985 bales which is 23% lower week on week. Fremantle is selling on Tuesday only and an offering of 4911 is forecast (a 37% drop week on week).
The latest release of Meat and Livestock Australia’s Industry Projections has a pertinent section on the structural shift in the national flock. Survey results continue
South Africa remains the major supplier of RWS-accredited merino wool for 19 micron and broader merino wool. This article looks at the South African merino
Varied seasonal conditions in different regions during the past year (ranging from good to awful), low prices and the live sheep export issue in Western
Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.
Back to reality
If we were handing medals out for the roughest week back, gold would go to the Northern Wool market. Despite a resilient Tuesday, the finer end lost ground Wednesday as 17MPG lost 53¢ to 1639¢/kg for the week in Sydney. Melbourne was runner-up as the pass-in rate reached double digits (12%) which took the edge off the softer market tone. The Bronze medal went to the west where the 19.5 MPG was the sole improver this week, increasing 7¢ to 1335¢/kg. The Western Market Indicator (WMI) lost 6¢ to 1248¢.
There has been a lot of discussion on supply this week, in particular the latest estimate from the Australian Wool Production Forecasting Committee (AWPFC). The wool trade is not immune to the side effects of less-than-ideal seasonal conditions in key sheep regions and elevated slaughter. We discussed the complexities of the current domestic supply situation with the AWPFC chairman Stephen Hill on this week’s episode of Commodity Conversations (listen here). The August estimate from AWPFC saw a reduction in forecast 2024/25 shorn wool production to 285mkg which is a 10% decline from the 23/24 forecast.
The decline in production is arguably beginning to rear its head at Auction already, with the national offering this season (167K bales) 21% lower than the same time last year. Unfortunately for those selling wool currently, easing supply hasn’t been a silver bullet for the current demand situation.
The impact of manufacturing confidence on demand was the focus of this week’s analysis article from Andrew Woods (read more here). Lagging economic growth continues to be the wool market’s problem child as weak economic indicators out of Germany and China continue to match low Merino prices. The Ifo Institute expects growth in the Euro area to pick up in 2025 back to around 2022 levels which should lend itself to some upward momentum in merino wool pricing (please note, crystal ball gazing and economic forecasts should always be handled with care).
Next week
On balance, the total offering size for next week is essentially the same (42K) but some steep changes in size across the three selling centres could make things interesting particularly in the North and out West.
Melbourne will sell Tuesday and Wednesday with a much larger offering expected, (almost 34% higher). Sydney will also sell Tuesday and Wednesday to an offering of 11985 bales which is 23% lower week on week. Fremantle is selling on Tuesday only and an offering of 4911 is forecast (a 37% drop week on week).
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: Nutrien Ag Solutions, AWEX, AWI, ICS, AWPFC, Mecardo
Categories
Have any questions or comments?
Merino component of flock under pressure
The latest release of Meat and Livestock Australia’s Industry Projections has a pertinent section on the structural shift in the national flock. Survey results continue
Battle of the Merino: South Africa vs Australia
South Africa remains the major supplier of RWS-accredited merino wool for 19 micron and broader merino wool. This article looks at the South African merino
Merino market lifts
The Merino section of the market took the credit for the modest improvement seen at auctions this week. The last two weeks of selling have
Drop in WA wool substantial but not unprecedented
Varied seasonal conditions in different regions during the past year (ranging from good to awful), low prices and the live sheep export issue in Western
Want market insights delivered straight to your inbox?
Sign up to the mailing list to get regular updates to new analysis and market outlooks
Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.