In March Mecardo looked at how RWS premiums for crossbred wool had revived from their low levels of 2023-24. Given the magnitude of the rise in merino prices this season it is timely to check how RWS premiums are tracking for merino wool.
Last July, Mecardo looked at RWS premiums for merino and crossbred wool in the June 2025 quarter (Article available here). Basically RWS premiums for merino fleece were running at 100-140 cents per clean kg. Since the June 2025 quarter the merino MPGs have risen by 48-56%, depending on micron category. The merino MPGs are now near the price range of the 2018-2019 cycle highs.
Figure 1 shows monthly average premiums for RWS accreditation in 19.5 micron fleece for South Africa (sourced from the weekly Cape Wool repots (available here) and Australian auctions. As earlier articles have noted the premiums were extraordinarily high in 2022, then plunged to lows in 2023 and 2024 before gradually recovering. The recovery saw a steady increase in premiums through to last September, when the premiums in both South Africa and Australia steadied. This corresponded with merino prices rising significantly from their levels of the premiums season. The conclusion is that as downstream processors came to grips with the higher greasy wool prices, there was little room for extra RWS premiums at the same time.
With the higher prices after the Christmas recess, it appears Australian premiums for RWS accredited merino wool has actually shrunk slightly. Figure 2 shows the April premiums for RWS merino indicator style fleece compared to comparable quality non-mulesed fleece. The median premium in April was around 70 cents per clean kg. This shrinkage in premium is reflected in the change in RWS accredited indicator style fleece which has risen since the June 2025 quarter by around 7% less than comparable non-RWS wool.
Supply data for RWS wool is thin in terms of looking at total volumes from all major regions (Australian New Zealand, South Africa and South America). The latest Textile Exchange information for market share by country runs only to 2024 (available here).
Figure 3 shows the RWS volumes for Australian merino sold at auction, New Zealand merino sold in Melbourne auctions and the presumed South African volumes (taken from the weekly report and adjusted to Australian farm bale weights) by month from 2021. The rolling 12 month total for these three sources reached 211,000 farm bales in late 2024 fell back to 180,000 farm bales in mid-2025 and has returned to 200,000 bales in April. That fall in supply was only arrested with increases in RWS premiums from mid-2024 onwards.
Basically the overall RWS accredited merino volume has not changed greatly since late 2024, implying that RWS premiums are being squeezed by the higher merino prices not increased supply (subject to further information about RWS merino volumes from South America).
What does it mean?
In a fast rising market, it is always a challenge for downstream processors to absorb the higher raw material prices. Merino prices are up by 50% on June 2025 quarter levels (Australian dollar terms) so it is no surprise that RWS premiums have come under pressure. The lesson of 2023 and 2024 though, is that lower RWS premiums will lead to lower supply.
Key Points
- Premiums for RWS accredited merino wool steadied last spring as the merino market rose strongly and appear to have shrunk slightly with further strong rises in merino prices since Christmas.
- The supply of RWS accredited merino wool from Australia and South Africa has increased slightly.
- Australian premiums for RWS accredited fleece wool were around 70 cents per clean kg in April.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: AWEX, Cape Wools, RBA, ICS, Mecardo
