Shorn wool fibres

The rally ended this week as the softer tone towards the end of last week translated to a full-scale retreat from the beginning of sales this week. While the end of last week trend was an indicator of what was to come, a significant jump in the offering was the final straw. To balance the ledger, the final sales of the week (notably a strong finish in Fremantle) were the best with the market support lifting prices, so perhaps this is the “correction we had to have”?

The Eastern Market Indicator (EMI) fell, losing 81 cents after rising 102 cents last weeks to close this week at 1138, a 6.6% decline for the week. This puts the EMI market rally since the beginning of September (at what appears to now be the low) at a 9.8% gain, with the EMI gaining a net 102 cents over an 8-week period. The AUD was marginally higher at US$0.714 which saw the EMI in USD terms giving most of last week’s rise back, closing at 813¢. Fremantle selling saw some of Tuesday’s losses clawed back, with a positive 10-cent WMI retracement on Wednesday to leave the Western Market Indicator down 38¢ or 3.1% for the week and now sitting at 1181¢.

No sector was spared as the price decline was across the board, with the Merino types giving up between 4 & 7%, while the strong performance of the Crossbred types last week was mitigated with 9-12% falls recorded this week.

Cardings fell by 33 & 17 cents in Sydney & Melbourne, however Fremantle bucked the trend and lifted 7 cents.

Another increased offering to last week of 37,432 bales came forward. With a pass-in rate of 26.4% nationally, 27,695 bales were sold, 4,744 bales fewer than last week.

New waves of COVID-19 in Europe and north America are going to delay recovery of apparel demand in these regions, impacting directly on the export market for mills in China, putting a limit on the recovery we can expect in the greasy market for the time being.

This week on Mecardo, Andrew Woods looked at the relationship between Chinese bond yields and the correlation with apparel fibre prices.

Chinese bond yields provide a view that Chinese credit growth will be supportive of firmer apparel fibre prices until around next autumn. This provides some assurance that the lift in prices since early September, or at least a good part of these rises, has a solid underpinning.

The week ahead….

The high pass-in rate sent a signal that growers are prepared to step out of this market if demand evaporates; this may provide support to prices. Along with the stronger Fremantle finish to the week we can be cautiously optimistic for next week.

There are 36,666 bales listed for sale with all centres selling on both Tuesday & Wednesday.

Have any questions or comments?

We love to hear from you!

Click on graph to expand

Click on graph to expand

Click on graph to expand

Data sources: AWEX, Mecardo

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!

Wool warms to Winter

Last week’s positive move continued with the market posting gains across all MPG’s, with the exception of 16.5 MPG in Melbourne which eased slightly. This

Read More »

Bale breakdown for May

Wool supply is one of the key components of the greasy wool market, and the greater supply chain, which we can monitor closely as the

Read More »

Want market insights delivered straight to your inbox?

Sign up to the mailing list to get regular updates to new analysis and market outlooks

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
Listen to the podcast

Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.

Photo of a farmer surrounded by Merino sheep in dusty yards
Research: Analysis of the Australian sheep flock

In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making. 

Image of harvested grain pouring into a chaser bin

We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.