Merino sheep in sunset

In mid-January, Mecardo looked at the supply of over-length wool in the Australian merino clip, with a consequent effect on discounts for over-long wool. Premiums for best quality merino fleece have been reported as good in recent markets.

What constitutes the best quality in a lot of wool depends on the requirements (and skill) of the mill an exporter is buying for. Beauty is in the eye of the beholder. However, in general terms, best quality fleece is defined as wool that is not too short nor too long (70-95 mm greasy staple length), staple strength is high (40+ N/ktx), vegetable matter is low (0-1%) and there are no subjective faults such as water stain.  There are some other objective measurements (such as the coefficients of variation of length and diameter) and increasingly a quality system accreditation which is required for promotion to the upper grades.

Staple strength in the Australian wool clip currently is at good levels, especially given the part of the season we are in when staple strength tends to be close to its low point for the year. Figure 1 shows the average staple strength for the Australian clip for the past decade.

The measurement that is combined with staple strength is the point of break in the middle (POBM). Figure 2 shows the monthly proportion of wool that was staple measured and had a POBM above 75% (high) during the past decade. It varies widely and tends to reach its maximum when staple strength reaches its minimum, which is typically the months surrounding the Christmas recess. It is currently neither high nor low, which for this time of the season is a good result.

Vegetable fault (VM) is one characteristic that is higher than normal. Figure 3 shows the average Australian VM level for the past decade. It normally reaches a low around the Christmas recess, which it has done this season but at a fairly high level for the time of the year. A high starting level promises even higher levels of VM as we move through the middle of 2023.

So, where does that leave the supply of good quality merino fleece wool? The various characteristics mentioned above filter out wool from the best categories, with staple length adding an extra substantial filter this year along with some persistent levels of water stain, cott, and unscourable colour.

In Figure 4, the proportion of good merino fleece (as defined above) to all merino wool sold in the micron range from 16 to 22 microns monthly for the past decade is shown. There is quite a seasonal pattern (driven by VM) with some big variations ranging from highs in the 10-11% range down to lows of 4%. Since mid-2020 the proportion of good merino fleece has been tracking at low levels. The seasonal pattern tends to see lows in the June quarter, so there is not likely to be any sizeable increase in the proportion of good merino fleece this season. This will keep the pressure on the buy side of the market to pay premiums for well-specified merino fleece wool.

What does it mean?

Merino wool is an agricultural commodity, meaning its quality varies with seasonal conditions. A complicating factor is that wool reflects the seasonal conditions present when it was growing on the sheep’s back, meaning in the past 6 to 12 months. Conditions in recent years have reduced the proportion of best-quality merino fleece sold at Australian auctions, and seasonal patterns indicate this proportion will remain low until the next season. This will help support premiums for better quality merino fleece.

Have any questions or comments?

We love to hear from you!

Print This Post

Key Points

  • The supply of good merino fleece wool is currently at low levels.
  • The seasonal pattern of supply for good merino fleece wool means the supply will remain low through to next season.
  • In turn, this means premiums for good merino fleece are likely to be supported due to low supply.

Click on figure to expand

Click on figure to expand

Click on figure to expand

Click on figure to expand

Data sources: AWEX, ICS,    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!

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.