Lean supply fuels competition despite a rising dollar

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The wool market rebounded in US dollar terms this week, coming off a two-week lull where it sat at the lower end of the recent trading range. A year ago, the AUD hovered at similar levels to where it is now, yet wool prices are roughly 10% lower.

The Eastern Market Indicator (EMI) picked up just 1¢ on the week, settling at 1,135¢/kg. The Western Market Indicator also lifted 2¢ to 1,275¢/kg. A rise in the AUD didn’t turn away buyers this week. With the AUD ending the week 0.7US¢ stronger, the EMI in USD terms landed up 9¢ at 754¢/kg.

In Sydney the Merino market strengthened this week, with high clearance rates as 16.5 to 20MPG’s gained between 13 and 27¢ on last week. Crossbred prices were stagnant at last week’s levels. Sale results were more mixed in Melbourne and Fremantle, but generally most Merino MPG’s ended the week slightly higher. 17.5MPG in Melbourne declined 9¢ over the week, falling closer in line with prices in Sydney. This was the largest week on week loss for the Merino fibre segment, but Merino cardings in Melbourne lost 16¢ on the week.

A smaller offering helped to keep competition alive despite the stronger dollar. 35,436 bales were offered to the trade this week, down from 38,476 the week prior. With a pass in rate of 6.3% nationally, 33,189 bales were sold. This was a decline of 5% week on week.

 

It is somewhat comforting to know that wool is not in this price cycle alone. Another luxury good, fine wine has also experienced weaker demand and prices since 2023. As shown in this week’s analysis by Andrew Woods (read here), the price of Merino wool and a fine wine index correlate fairly well, presumably responding to similar macroeconomic signals. 

The week ahead….

Next week 39,319 bales are currently rostered for sale, with a one-day sale in the West on Tuesday as just 6,233 bales are on offer.

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

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