The Australian merino clip has changed dramatically during the past three decades, and change continues. This article takes a look at the changes which have taken place.
Some historical background to the mid-1990s is useful for context. Technology changed in the 1970s with the advent of objective measurement in greasy wool and the adoption of containerisation. Thereby, encouraging processing mills to become quite specific in their greasy wool requirements. At the same time European fabric weights were trending lower, requiring finer wool. In the late 1980s the USSR collapsed and with it went a large hunk of demand for broad merino wool, and the RPS. The 1990s was a decade of selling down massive wool stockpiles, depressing wool prices and leading to big reductions in flocks in the major wool-exporting nations.
The merino proportion of the Australian wool clip (see article 13-Nov-23) peaked around 1990, after increasing markedly during the 1980s with a focus on 22-23 micron. Since 1990 the merino proportion of the clip has trended lower. With this in mind merino proportions from auction volume data have been used to calculate the merino component of AWTA core test volumes, which are the best estimate of wool production in Australia.
Figure 1 shows the micron distribution of the calculated merino component of AWTA core test volumes from the 1993-94 and 2023-24 seasons. In the mid-1990s, the merino clip averaged 21.6 micron and had a volume of 494 mkg clean. Three decades later, the merino clip averaged 18.6 micron and had a volume of 169 mkg clean. The clip had become 3 microns finer and shrunk in volume by two-thirds.
Figure 2 shows the change by micron category in clean mt, as well as the percentage change. Clearly, what was the average to broader merino wool in the mid-1990s (21 micron and broader) has effectively disappeared, with 20-micron volumes down by half, 21-micron volumes down 86% and 22 micron by 96.3%. It has to be noted broader merino volumes have been pulled lower this season by conditions and are likely to rebound (given rainfall) next season, but the overall story will not change much. As the October article (see here) showed, the lower volume has allowed the price ratio for broader merino to other apparel fibres to rise.
If we were still producing merino wool at the same micron and volume of the mid-1990s the price for the 21 MPG would likely be half of its current price (725 versus 1449 cents). Feedback from processors indicates they are well aware of the better prospects of finer merino wool, with the broader categories more closely tied to other (lower) apparel fibre prices.
While the overall decline in volume has been large, there have been areas of growth. The 19 micron and finer categories have all enjoyed growth in production and demand as the article in July (see here) showed clearly for 15-micron wool. Additionally, the decline in sheep numbers seen in Australia, driving the decline in wool volumes, has been mirrored in the other southern hemisphere wool exporters (see here) which has helped underpin higher sheep meat prices (see here).
What does it mean?
Anecdotal evidence points to the Merino flock currently shrinking (it would be good to have some well-researched data rather than anecdotal evidence). The experience of the past thirty years shows that even amongst times of big reductions in the merino flock, there have been areas of growth. It has not been all supply and demand destruction.
Key Points
- While the overall volume of the merino clip has fallen by two-thirds during the past three decades, some micron categories have grown.
- The merino industry has abandoned the micron categories which face the greatest competition from the major apparel fibres.
- The reduction in sheep numbers has helped underpin higher sheep meat prices.
Click on figure to expand
Click on figure to expand
Data sources: AWTA, AWEX, ICS
