Low VM competition leads to higher demand

Merino sheep walking out of a shed

With pass-in rates reaching a seasonal low point and all Merino categories improving across the country, sentiment in the wool market was strong this week.

With every fine and medium micron category improving in price this week, The Eastern Market Indicator (EMI) jumped 21ȼ to finish at 1148 ȼ /kg. When expressed in US$ the EMI rose 17 cents to 736 ȼ/kg on the back of exchange rate appreciation.

In Sydney, demand was strong for presented lots and the pass-in rate sat at 3.1% for the week. 19MPG rose 47ȼ to 1451ȼ /kg; 18MPG rose 28ȼ to 1553 ȼ/kg. At the finer end of the spectrum, buyers were more selective, and the price increases were more subdued, 17MPG finished 4ȼ higher to 1722 ȼ/kg. The positivity in the market also resided in Melbourne where a larger proportion of high VM wool created competition for the scarce low VM lots. As a result, the rising tide lifted all ships and 17MPG rose 20ȼ to 1758 ȼ/kg, 18MPG increased 41 ȼ to 1567 ȼ/kg and 21MPG increased 38 ȼ to 1311 ȼ/kg. Melbourne’s pass-in rate averaged 4.8 % for the week as the East Coast markets combined cleared nearly 31.5K bales.

To the West, the Fremantle market had a positive week. With demand strong for well-prepared lots, West Australian pass-in rates reached 6.1%. With bidding for lesser styles still consistent, the percentage of lots reoffered reached 17.2%. 18MPG increased 12 ȼ to 1550 ȼ/kg, 19MPG increased 23 ȼ to 1448 ȼ/kg and 21MPG improved 11 ȼ to 1302 ȼ/kg.

Crossbreds continue the climb back from the doldrums, as 28MPG increased 30 ȼ in Sydney to 375 ȼ/kg and rose 20 ȼ to 370 ȼ/kg in Melbourne. Cardings in Sydney and Melbourne were unchanged at 710 ȼ/kg and 697 ȼ/kg respectively; Fremantle increased 19 ȼ to 722 ȼ/kg.

The offering this week was well received by the market as the pass-in rate nationally was its lowest for the 2023/24 season thus far at 5.1%. Perhaps contributing to the success of the week’s offering was the Vegetable matter characteristics of the clip. Nationally the offering averaged a higher proportion of Merino fleece that is <1.0%Vm, increasing 5.5% week on week to 46.3%. 39 307 bales were sold nationally, 1% above this season's weekly average of 38988 bales.

This week on Mecardo, Andrew Woods investigates the global supply of Non-Mulesed Merino Wool (read here). Some 17% of the Australian merino clip is CM-NM, which accounts for 35% of the international supply of CM-NM merino wool.

Next week

Volumes have been strong to start the wool market this season with this week no exception as bales sold were 39% above the 5-year average. With spring typically seeing lower volumes sold, upcoming supply could begin to run into seasonal demand pressures. All three sale centres are selling on Tuesday and Wednesday next week with the offering expected to reach 42K bales.

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Data sources: AWEX, AWI, Mecardo

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