Merino sheep walking out of a shed

This week, the wool market found its back against the wall as prices tumbled. Variations in the vegetable matter (VM), staple strength, and variation in Hauteur length (CVH) amongst this week’s offering made buying difficult. This translated through to pricing, as all fine and medium micron price categories dropped this week.

The Eastern Market Indicator (EMI) fell a further 21ȼ to 1263 ȼ/kg this week to sit at its lowest level for the calendar year. This time last year it was 11% higher at 1420 ȼ/kg. The EMI when expressed in US$ is 840 USȼ/kg, a decline of 28 ȼ for the week.

Sydney and Melbourne had a tough week as demand for lots in this offering wasn’t strong. 18.5 MPG fell 55 ȼ to 1679 ȼ/kg in Sydney and dropped 42 ȼ to 1664 ȼ/kg in Melbourne.  Increased vegetable matter fault and staple lengths were an issue for buyers and put downward pressure on the market.  When buyers could get what they were after (lower variation in CVH) prices did recover illustrated by a positive bounce back in Melbourne on Wednesday.  However, the damage was done as all fine and medium micron price categories ended the week worse off price-wise.

The Western Market Indicator (WMI) lost more ground this week finishing 16 ȼ lower at 1402/kg. 21MPG was down 22 ȼ/kg to 1393 ȼ/kg.  Western sellers were staying the course and not budging on reserves with pass-in rates at 22.8% and Wednesday withdrawals at 23.7%. It appears that patience is a virtue on the West Coast.

Crossbred results were mixed, 25MPG and 26MPG in Melbourne were up 5 ȼ to 720 ȼ/kg and 555 ȼ/kg respectively (the only green prices to be seen this week). Melbourne 28MPG dropped 10ȼ to 325ȼ/kg.

In Sydney, cardings were down 7ȼ to 774 ȼ. Melbourne and Fremantle cardings slid more dramatically with Melbourne losing 18 to 786 ȼ and Fremantle dropping 47ȼ to 738ȼ.

35,984 bales sold this week nationally, which is just under the seasonal weekly average of 36,800. The offering this week (42,492) was similar to last (43,454) but the pass-in rate was significantly lower at 15.3%.  In an easing market, an improvement in the pass-in rate (for the East Coast anyway) suggests that sellers are not willing to wait and see.

This week on Mecardo, Andrew Woods investigates the change from La Niña to El Niño (Read here) and what it could mean for sheep and wool production regions. Whilst the prospect of an El Niño is not very palatable; rainfall outcomes in an El Niño year can vary dramatically.

The week ahead….

Significant volumes have, for the most part, been managed by the market this calendar year. However, in recent weeks, large offerings made up of a lower proportion of ideal vegetable matter and CVH measurables have not fared so well.   

Another big offering is heading to markets next week with almost 46 000 bales scheduled across the three sales centres.  Sydney, Melbourne, and Fremantle will be selling on Tuesday and Wednesday next week.

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Data sources: AWEX, AWI Mecardo

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