In the second last sale for 2020, the wool market started strongly and continued apace over both selling days. The early indication of buyer interest on the forward markets was a precursor to a strong week of wool sales.
Growers accepted the price rally and upped the clearance while reducing the pass-in rate to a 9-week low.
The Eastern Market Indicator kept climbing up and up this week, 26¢ on Tuesday and 28¢ on Wednesday, to eventually close this week 54 cents higher at 1198¢. The AUD was again firmer at US$0.774 which saw the EMI in USD terms finish 48 cents higher at 892¢. Fremantle also moved 46¢ higher settling at 1244¢.
It was mostly green across the board this week, Crossbred types no exception, with 32 MPG in Melbourne lifting the most, posting a 37-cent lift, a 15.2% gain on last week.
Cardings lifted by 32 in Melbourne, 25 in Sydney while Fremantle lost 2 cents.
It was in the finer 16.5 and 17 MPG categories in Melbourne where we saw the biggest movement for the week, finishing 142 and 114 cents higher respectively. There were increases in all types though, 18 to 21 MPG lifts ranged from 46 to 81 cents.
It was a higher offering and clearing this week than last, with 38,478 bales offered and 36,478 bales sold.
The pass-in rate collapsed to half of last weeks figure with only 5% not sold; this was the lowest pass-in percentage terms since mid-October earlier this year.
This week on Mecardo, Andrew Woods looked at the building grower stock position (view article here). Wool stocks held by growers have picked up since mid-2018 in response to lower prices. While current stocks are likely in the range of 250-320,000 farm bales, if current trends continue, they are likely to end up close to 360,000 bales in mid-2021. This would put stocks at 22-23% of annual shorn wool production.
Given the strong cash flows enjoyed by many farmers in 2020, the consistent feedback is that farmers are happy to hold greasy wool stocks for some time. Considering the severe drop in demand out of Europe and North America this is a logical strategy. Stock levels expressed as a proportion of production remain well below the massive levels existing in the cotton industry. Given the low levels of stock reported along the supply chain, when demand does start to crank back up, a sizeable proportion of farmer held stocks will be required to re-stock the supply chain.
The week ahead….
With the end of year three-week recess coming up, a larger offering of 49,126 bales is rostered for next week, with all centres selling on both Tuesday & Wednesday.
Another performance like this week in the final sale for the year would provide optimism along the supply chain and increase the expectation of further price increases in the New Year.
With the eternal battle between enterprises for farm resources continuing, it is interesting to stand back and see what has changed and what hasn’t between
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.
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.
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.
Market up with one week to go
The Eastern Market Indicator kept climbing up and up this week, 26¢ on Tuesday and 28¢ on Wednesday, to eventually close this week 54 cents higher at 1198¢. The AUD was again firmer at US$0.774 which saw the EMI in USD terms finish 48 cents higher at 892¢. Fremantle also moved 46¢ higher settling at 1244¢.
It was mostly green across the board this week, Crossbred types no exception, with 32 MPG in Melbourne lifting the most, posting a 37-cent lift, a 15.2% gain on last week.
Cardings lifted by 32 in Melbourne, 25 in Sydney while Fremantle lost 2 cents.
It was in the finer 16.5 and 17 MPG categories in Melbourne where we saw the biggest movement for the week, finishing 142 and 114 cents higher respectively. There were increases in all types though, 18 to 21 MPG lifts ranged from 46 to 81 cents.
It was a higher offering and clearing this week than last, with 38,478 bales offered and 36,478 bales sold.
The pass-in rate collapsed to half of last weeks figure with only 5% not sold; this was the lowest pass-in percentage terms since mid-October earlier this year.
This week on Mecardo, Andrew Woods looked at the building grower stock position (view article here). Wool stocks held by growers have picked up since mid-2018 in response to lower prices. While current stocks are likely in the range of 250-320,000 farm bales, if current trends continue, they are likely to end up close to 360,000 bales in mid-2021. This would put stocks at 22-23% of annual shorn wool production.
Given the strong cash flows enjoyed by many farmers in 2020, the consistent feedback is that farmers are happy to hold greasy wool stocks for some time. Considering the severe drop in demand out of Europe and North America this is a logical strategy. Stock levels expressed as a proportion of production remain well below the massive levels existing in the cotton industry. Given the low levels of stock reported along the supply chain, when demand does start to crank back up, a sizeable proportion of farmer held stocks will be required to re-stock the supply chain.
The week ahead….
With the end of year three-week recess coming up, a larger offering of 49,126 bales is rostered for next week, with all centres selling on both Tuesday & Wednesday.
Another performance like this week in the final sale for the year would provide optimism along the supply chain and increase the expectation of further price increases in the New Year.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: AWEX, Mecardo
Categories
Have any questions or comments?
The Chinese sheep flock and wool clip
In any search for world sheep or wool information, the Chinese sheep flock and wool clip come up as the largest. Detail is important when
Weak dollar welcomes wool
The wool market returned from its three-week Christmas break making a very strong start to 2025. The market was assisted by a weaker AU dollar
History of the Southern hemisphere sheep flock
The recent AWPFC forecast for wool production to be down to levels of the early 1920s (and 2019) warrants a look at what has been
Wool production changes across Australia’s sheep regions
With the eternal battle between enterprises for farm resources continuing, it is interesting to stand back and see what has changed and what hasn’t between
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
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.
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.
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.