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 wool market posted strong results this week, marking two consecutive weeks in the green, with the Eastern Market Indicator rising 39c to 1458c. After
The wool supply chain operates on averages for expected production in terms of quality. Quality varies through the season normally, with staple strength and vegetable
Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
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Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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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
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Have any questions or comments?
More green shoots for wool
The wool market posted strong results this week, marking two consecutive weeks in the green, with the Eastern Market Indicator rising 39c to 1458c. After
Staple strength in the eastern Australian states
The wool supply chain operates on averages for expected production in terms of quality. Quality varies through the season normally, with staple strength and vegetable
Wool finds relief after a long month
The wool market found renewed life this week, with the Eastern Market Indicator (EMI) lifting 6¢ to 1419¢/kg, while in US dollar terms it slipped
Wool supply update
Greasy wool supply is top of mind in the upper stages of the supply chain as mills balance low stocks, potential increases in demand, and
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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.
MEET THE TEAM
Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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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.