Exchange rate pain is wool markets gain

Sheep muster in outback Queensland near Charleville.

Sydney and Fremantle markets made up for lost time with big improvements across both the broad and merino fleece categories this week. The lower Aussie dollar spurned strong bidding, and sellers sensing they might be on the best wave of the set were keen to take advantage as the national pass-in rate reached a seasonal low of 3.4%.

The Aussie dollar depreciation this week comes as the global economy reacts to concerns about conflict and in particular the most recent US CPI data put doubts on the US’s ability to enact several rate cuts this year. This saw Australian wool become the slightest bit more affordable for the export market as the EMI in USD lost 1¢ to 743 US ¢/kg.

While the economic news out of the US has been a dampener for the economy overall, the wool market this week has been a welcome distraction. Double-digit improvements occurred in all categories this week.  In Sydney, 18MPG rose 29¢ to 1,539¢/kg and 20MPG improved 32¢ to 1,362¢/kg. The pass-in rate in Sydney was just 1.5% as sellers were more than willing to meet buyers in a dearer market.

In Melbourne, the finer microns performed best. 16.5MPG improved 48¢ to 1,828¢/kg and 21MPG improved 16¢ to 1,322¢/kg. The dearer trend extended to the crossbred section of the offering as 28MPG improved 10¢ to 362¢/kg and 30 MPG jumped 13¢ to 335¢/kg.

The best results were out west, with over 9000 bales sold and the Western Market Indicator (WMI)  improving 3% week on week. This was driven by 50¢ and greater improvement for 18-19 MPG’s,  as the 18-19 MPG’s all improved more than 50¢ each.  18MPG gained 51¢ to 1,550¢/kg and 21 MPG jumped 36¢ to 1,332¢/kg.   

This week Andrew Woods provided an update on RWS premiums, (Read more here). It’s not a simple story of a standard premium to be added to the base price of a lot, in fact, the variation in the price effect for RWS accreditation is quite wide.  Basically, the median premiums have been between 20 and 45 cents per clean kg across the micron range this season, with significant variation around this level.

Next week

Next week’s offering is estimated at 44K bales with sales in all three centres on Tuesday and Wednesday only.

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Data sources: AWEX, Nutrien Ag Solutions,Refinitiv, Mecardo

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