Erratic was the word used by AWEX to describe the wool market this week. In a mirror image of last week, the market opened weaker on the back of increased volume.
Selling on the first day this week was met with a 15% pass-in rate and encouraged grower withdrawals of wool, which then contributed to a reversal back to where the market began on the final day.
The Eastern Market Indicator (EMI) for the week improved by just 1¢ to close this week at 1189¢, however the fall of 33 cents on the opening day left sellers disappointed while a reduced offering on Wednesday saw all of this fall recovered. The AUD was stronger at US$0.73 which saw the EMI in USD terms finish 16 cents or 1.8% higher at 869¢. Fremantle had a positive 24¢ or 2% rise for the week and now sits at 1241¢. This was impacted by a withdrawal of 29% of the fleece offering in WA resulting in the remaining wool attracting good support with minimal movements across the MPG range. This carried over to the final day with the positive effect spilling over to Melbourne & Sydney as well.
The results were mixed with Sydney & Fremantle for the week posting positive gains for all Merino MPG’s, while Melbourne’s improvement was limited to the 17, 19 & 21 MPG categories.
Crossbred types were generally cheaper except for 32 MPG which posted a 15-cent lift in Melbourne.
Cardings rose in Melbourne by 7 cents but gave up 33 & 27 cents in Sydney & Fremantle respectively.
A much larger offering to last week of 37,512 bales came forward, with 33,180 bales sold, almost 3,000 more than last week with a pass-in rate of 11.5% nationally. Of interest was on day one of the selling week, across the three selling centres 15% of the offering was passed in, with Sydney the highest passing 16.5% of bales offered.
This week on Mecardo we looked at the relationship between auction volumes and price movements. When demand suffers a contraction (as it did in mid-2019 and again this autumn due to COVID-19) the volume of wool sold falls sharply, steadying and recovering as confidence returns to the market which trades at a new, lower price level. This appears to be happening again.
Key take away points were that weekly sales volumes have picked up since the April to June 2020 period. Sales volumes in September/October in 2020 were on par with the same period in 2019, however, since May there has been no discernible relationship between weekly changes in offer volumes and the average merino price.
The week ahead….
A larger offering of 43,539 bales is rostered for next week with all centres selling on both Tuesday & Wednesday.
Again, volume of this magnitude will test buyer capacity, however recent seller strategy of withdrawing lots may remove some supply pressure on the market.
Wool production volumes have been under strong downward pressure during the past year as a combination of dry seasonal conditions, increased costs, and low prices
Despite early buyer interest in the reduced supply, softer demand for finer Merino weighed on the market, while the crossbreds and courser segments showed resilience.
Non-mulesed accreditation is a stepping stone to qualification of various quality schemes, which in turn are stepping stones to premiums in the greasy wool market
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Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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Luck of the draw
The Eastern Market Indicator (EMI) for the week improved by just 1¢ to close this week at 1189¢, however the fall of 33 cents on the opening day left sellers disappointed while a reduced offering on Wednesday saw all of this fall recovered. The AUD was stronger at US$0.73 which saw the EMI in USD terms finish 16 cents or 1.8% higher at 869¢. Fremantle had a positive 24¢ or 2% rise for the week and now sits at 1241¢. This was impacted by a withdrawal of 29% of the fleece offering in WA resulting in the remaining wool attracting good support with minimal movements across the MPG range. This carried over to the final day with the positive effect spilling over to Melbourne & Sydney as well.
The results were mixed with Sydney & Fremantle for the week posting positive gains for all Merino MPG’s, while Melbourne’s improvement was limited to the 17, 19 & 21 MPG categories.
Crossbred types were generally cheaper except for 32 MPG which posted a 15-cent lift in Melbourne.
Cardings rose in Melbourne by 7 cents but gave up 33 & 27 cents in Sydney & Fremantle respectively.
A much larger offering to last week of 37,512 bales came forward, with 33,180 bales sold, almost 3,000 more than last week with a pass-in rate of 11.5% nationally. Of interest was on day one of the selling week, across the three selling centres 15% of the offering was passed in, with Sydney the highest passing 16.5% of bales offered.
This week on Mecardo we looked at the relationship between auction volumes and price movements. When demand suffers a contraction (as it did in mid-2019 and again this autumn due to COVID-19) the volume of wool sold falls sharply, steadying and recovering as confidence returns to the market which trades at a new, lower price level. This appears to be happening again.
Key take away points were that weekly sales volumes have picked up since the April to June 2020 period. Sales volumes in September/October in 2020 were on par with the same period in 2019, however, since May there has been no discernible relationship between weekly changes in offer volumes and the average merino price.
The week ahead….
A larger offering of 43,539 bales is rostered for next week with all centres selling on both Tuesday & Wednesday.
Again, volume of this magnitude will test buyer capacity, however recent seller strategy of withdrawing lots may remove some supply pressure on the market.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: AWEX, Mecardo
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Have any questions or comments?
Merino and non-merino wool volumes in Australia
Wool production volumes have been under strong downward pressure during the past year as a combination of dry seasonal conditions, increased costs, and low prices
Crossbreds outshine merino in tight week
Despite early buyer interest in the reduced supply, softer demand for finer Merino weighed on the market, while the crossbreds and courser segments showed resilience.
State of origin in non-mulesed wool
Non-mulesed accreditation is a stepping stone to qualification of various quality schemes, which in turn are stepping stones to premiums in the greasy wool market
Quiet week as winter approaches
The wool market posted a modest gain this week, with the Eastern Market Indicator (EMI) rising one cent to close at 1,204 cents per kilogram.
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
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.
MEET THE TEAM
Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
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.