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 clip in 2023-24 and compares it to the Australian merino clip.
Regular market reports and supply analyses of the South
African wool market are available on the excellent Cape Wools website (read more here). In 2023-24 the South
African merino clip accounted for 71% of the clean volume of wool offered for
sale (around 167,000 Australian farm bale equivalents). The average bale weight
in South Africa was 155 greasy kg while in Australia it was 178.7 kg greasy.
In Australia, the AWTA tested 1.86 million bales last season
(with 76.6% of auctions sales by clean volume being merino). Of the AWTA total
18.9% were tested in Western Australia. In
clean terms the South African merino clip was 12.4% of the size of the
Australian merino clip using the Cape Wools offered volume versus Australian
auction sales.
Cape Wools provides detailed breakdowns of wool by breed and
wool characteristics (such as micron) for wool offered for sale, which is some
3% greater than wool sold. There is a staple length difference between the two
clips which was covered in an article in August 2023 (read more here).
Figure 1 shows the merino distribution by half micron for Australian wool sales
last season and a modelled South African distribution, so we can look at the
sub-17 micron volumes (which make up around 4% of the South African merino
clip). The line (RHS) shows the proportion of South African merino wool to the
Australian merino clip by half micron. The South African merino clip is nearly
a micron broader than the Australian merino clip so it is relatively larger in
relation to the broader Australian merino categories. For example, the South
African merino volumes are around 20% of Australian volumes for the 19.5
through 21 micron categories, with the proportion falling away for both the
finer micron categories.
All wool is not equal, so a better comparison of the South
African and Australian merino clips requires adjustment for mulesing and then
for RWS accreditation. Month to month between 15% and 20% of the Australian
merino clip sold at auction will be declared CM-NM (ceased mulesed or
non-mulesed). Figure 2 shows the South African merino volumes as a proportion
of the Australian volumes for all wool, CM-NM wool and then RWS-accredited
wool, assuming 51% of the South African merino wool sold last season was accredited.
The micron categories used in Figure 2 match the categories published by Cape
Wools.
For CM-NM wool, South Africa nearly matches the Australian
18.5 micron category, and then increases to 100-150% of Australian volumes for
19 through 22 micron, dropping back to 50% on the very broad edge of Australian
merino production. When it comes to RWS accredited merino wool South Africa is
simply the major supplier for 18.5 micron and broader merino wool, by a long
way. From 19 to 22 micron South African supplies two to four times the
Australian supply of RWS merino wool.
Finally, in Figure 3, we compare the average South African
merino price with the average Australian merino price, adjusted to match the
South African average point of micron, in Australian dollar terms. Last season
the South African merino clip averaged 19.3 micron, so in this comparison, the
average 19.3 micron merino price for Australia has been used. The average South
African merino fibre diameter is shown by season on the graphic back to
2005-2006. For each season the average Australian merino for the micron has
been extracted to allow a comparison of like for like. It is no surprise that
the two price series track each other closely, occasionally getting out of line
and then moving back into line. In recent seasons, since the advent of
substantial RWS accreditation and premiums in the South African clip, the
average South African price has consistently traded at a premium to the
Australian price, although there is a role played in differing export logistics
costs between the regions.
What does it mean?
The South African merino clip has managed to differentiate itself from the Australian clip in recent seasons by not being from mulesed sheep and having half of the clip accredited to RWS. In terms of supply, for these characteristics, South Africa supply is equivalent or greater than the Australian supply in the 19 to 22 micron categories. In recent seasons the South African average prices have moved to a consistent premium to the equivalent Australian price (same point of micron), although there are differing export logistics costs to consider (South Africa has lower costs).
Key Points
- The South African merino clip in total is around 12% of the size of the Australian merino clip (clean terms). When adjusted for non-mulesed the South African clip is equal or larger in the 19 to 22 micron categories.
- When limited to RWS accredited wool the South African merino clip is two to four times the Australian merino clip in the 19 to 22 micron categories.
- The Australian and South African merino clips receive very similar prices at auction when compared on the same point of micron, with the South African clip trading at consistent premiums in recent seasons.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: Cape Wools, RBA, AWEX, IWTO, ICS, Mecardo
