Well before the COVID-19 pandemic created severe economic damage across the world, apparel fibre prices were in a down cycle, with the broad crossbred categories the weakest performers. This article takes a current look at Australian and New Zealand prices for broad crossbreds.
New Zealand wool prices are published by PGG Wrightson (HERE) which is of interest to broad crossbred producers as New Zealand is the pre-eminent producer of broad crossbred wool. Within the Australian clip, crossbred wool accounts for about 20% of the volume, and within the Australian crossbred clip, only 6% of the wool is broader than 32 microns. As a consequence Australian broad crossbred quotes do not have a lot of data behind them.
Figure 1 compares monthly average prices for 33 microns Australian and New Zealand full length crossbred wool, in Australian cents per kg from 2017 to this month (to date). Crossbred prices peak in early 2019, and thereafter trended lower, with the 33-micron prices falling by around 60%.
The second schematic (Fig 2) compares an Australian 35 micron price series with a 36 micron New Zealand price series from 2017 onwards. Like the 33 micron series, these broader micron series have fallen by 50-60% since early 2019. The New Zealand series have found some support in recent months, which hopefully is a harbinger of further support.
In Figure 3 the big New Zealand series are shown, 38 and 39 micron – a full 20 microns broader than the key Australian Merino micron category. These two series have followed the same story, with values falling by 50% since mid-2019, after spending the previous two years in a trading range between 290 and 340-350 cents. In May the 38-39 micron price series slipped well below the minimal basis to polyester staples fibre for the past 20 years, so the recent stability in price might simply be the wool price lifting back to its minimum basis to the polyester staple fibre price.
The final schematic, in Figure 4, shows the Australian price ratio of 34 to 28 micron from 2008 to last week. This shows the weakness for broad crossbred price clearly. In the period of 2008 through to 2016, the 34-micron price ranged between 0.6 and 0.8 of the 28-micron price. It was a big enough range, but a defined ranged nonetheless. In 2016-17 the price ratio changed dramatically, effectively halving by falling to 0.3 to 0.4 where it remains.
What does it mean?
There is not a lot to cheer about with regards to broad crossbred wool prices. They looked to have stepped down to lower price ratios to finer crossbred wool three years ago, and remain at these new price ratios. As the Merino and finer crossbred prices have fallen, the broader crossbred market has simply tracked lower, while maintaining the existing price ratios. A lower limit in price may have been reached in mid-2020 in relation to polyester staple fibre, which seems to have helped stabilise prices. Hopefully the polyester staple fibre price holds.
Key Points
- Broad crossbred prices have fallen by 50-60% since early 2019.
- As usual, Australian and New Zealand prices follow the same patterns.
- In mid-2020 the 38-39 micron prices fell to 25 year lows in relation to polyester staple fibre prices, which may explain the recent stability in broad crossbred prices.
- Broad crossbred prices fell in relation to finer crossbred prices (28 micron is used in this article) in 2016-17 to new, lower price ratios where they remain.
Click on graph to expand
Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: AWEX, PGG Wrightson, RBA, ICS , Mecardo
