The Reserve Bank's decision to hold the cash rate was an early Christmas gift to many in Australia, but the wool market was an immediate beneficiary as auction momentum ramped up on Wednesday and Thursday.
The AUD/USD exchange rate has played a
critical support role for commodities this year and recent upward movement has
impacted the market. A recent upward movement in the exchange rate has been
tied to improving sentiment around the Interest rate path being taken by the US
Federal Reserve. The Aussie dollar did trend lower however after the RBA’s decision
to not alter the cash rate which lifted pressure off wool pricing. The Eastern
Market Indicator (EMI) improved 11ȼ to 1177 ȼ/kg and is just 8% lower YoY but
spurned by the easing of the exchange rate the EMI expressed in US$ eased 7ȼ to
770 USȼ/kg.
In Sydney, improvements were strongest for
finer micron price categories, after Tuesday’s mixed results were followed by
strong demand on Wednesday (which had a daily pass-in rate of 3.7%). 18MPG in Sydney improved 35 ȼ to 1627ȼ/kg and
20MPG increased 14 ȼ to 1368 ȼ/kg.
Improvement in finer microns continued
further South to Melbourne, with 17MPG jumping 71ȼ to 1855ȼ/kg and 18MPG climbing
49ȼ to 1632 ȼ/kg. Pass-in rates on
average were the lowest for Southern markets this week (5.7%) with bidding
strongest for fine merino lots under 4% VM. 25MPG crossbred wool in Melbourne
increased 14 ȼ to 736 ȼ/kg.
The West bounced back this week with all
price categories improving on the week. 18MPG increased 24ȼ to 1597ȼ/kg and
19MPG sits at 1399 ȼ/kg a rise of 19ȼ. The average VM for merino fleece this
week was 1.1%. The Western Market Indicator sits at 1305 ȼ/kg and as similar to
the other side of the country, sits just 8% lower YoY.
Andrew Woods investigated the impact of the
dry spring, most of the Merino sheep regions experienced this year on supply
for 2024 (read
here). A shift finer in the merino
micron distribution has implications for the supply of fine and broad merino
micron categories in 2024. It also has implications in terms of volume as clean
fleece weight tends to be positively correlated to fibre diameter.
Next week
Santa claus will be here in 17 days, and the Christmas recess is two sale weeks away. Auction volumes will be substantial as the supply chain gets its affairs in order.
50K bales are scheduled next week, with Sydney and Fremantle selling on Tuesday and Wednesday. Melbourne will sell Tuesday, Wednesday and Thursday.
In mid-2022 Mecardo looked at the international supply of sheep meat (albeit from a limited number of countries) showing how lower supply had positively correlated
Sydney and Fremantle markets made up for lost time with big improvements across both the broad and merino fleece categories this week. The lower Aussie
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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.
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Rate decision benefits sellers
Next week
Santa claus will be here in 17 days, and the Christmas recess is two sale weeks away. Auction volumes will be substantial as the supply chain gets its affairs in order.
50K bales are scheduled next week, with Sydney and Fremantle selling on Tuesday and Wednesday. Melbourne will sell Tuesday, Wednesday and Thursday.
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Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: AWEX, Refinitiv, Mecardo
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International sheep meat supply and lamb prices
In mid-2022 Mecardo looked at the international supply of sheep meat (albeit from a limited number of countries) showing how lower supply had positively correlated
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Exchange rate pain is wool markets gain
Sydney and Fremantle markets made up for lost time with big improvements across both the broad and merino fleece categories this week. The lower Aussie
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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.
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.
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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.