The upcoming recess for the Australian wool market saw a bump in demand and pricing, with the steepest price improvements coming from the finer end of the offering. As a result, the Eastern Market Indicator (EMI) improved 17¢ to 1254¢/kg, a 1.5% improvement week on week.
Best on ground this
week was 17MPG in Sydney, which jumped 84¢ to 1692¢/kg. 21MPG in Melbourne rose
19¢ to 1303¢/kg, which led to a bounce back in the fine wool premium for this
week. The basis from 17MPG to 21MPG in
the Southern market improved 13% week on week, but as seen in Figure 2 is still
testing the depths of the historical range since COVID.
The upcoming recess
break saw buyers more willing to secure volume, with 29,784 bales sold this
week. This level is about on par with the weekly average of bales sold thus far
into the season (Figure 3) which is 21% lower than last season’s average.
Whilst this change is indicative of the demand situation at present, it is
important to consider that the 4 weeks start before the break has resulted in
more wool in front of buyers at an earlier point in the season.
The national
pass-in rate of 6.8% is the lowest of the season thus far and signals the
current mood of the market with sellers preferring not to miss out on a demand
bump when presented to them.
In the stagnant
conditions of global demand, the market is particularly sensitive to relatively
minor changes in the exchange rate (Australian to US). With the Aussie dollar
dipping back below 67¢ again, the affordability of importers was enhanced
slightly, contributing to the willingness to bid higher.
Andrew Woods took a
deeper look into the merino fleece market in US and Aussie dollar terms. When
we think about the last 15 years, in both US dollar and Aussie dollar terms,
pricing for Merino wool is near rock bottom. Historical prices, adjusted for
inflation, show there to be plenty of upside when demand begins to pick up,
with the “when” the key uncertainty (read more here).
Could prices potentially lift 30-50% when demand improvements appear on
the horizon?
Next week
A well-earned break for the wool market is ahead, sales will commence again on the 19th of August 2024.
The latest release of Meat and Livestock Australia’s Industry Projections has a pertinent section on the structural shift in the national flock. Survey results continue
South Africa remains the major supplier of RWS-accredited merino wool for 19 micron and broader merino wool. This article looks at the South African merino
Varied seasonal conditions in different regions during the past year (ranging from good to awful), low prices and the live sheep export issue in Western
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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.
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.
Recess Relief
Best on ground this week was 17MPG in Sydney, which jumped 84¢ to 1692¢/kg. 21MPG in Melbourne rose 19¢ to 1303¢/kg, which led to a bounce back in the fine wool premium for this week. The basis from 17MPG to 21MPG in the Southern market improved 13% week on week, but as seen in Figure 2 is still testing the depths of the historical range since COVID.
The upcoming recess break saw buyers more willing to secure volume, with 29,784 bales sold this week. This level is about on par with the weekly average of bales sold thus far into the season (Figure 3) which is 21% lower than last season’s average. Whilst this change is indicative of the demand situation at present, it is important to consider that the 4 weeks start before the break has resulted in more wool in front of buyers at an earlier point in the season.
The national pass-in rate of 6.8% is the lowest of the season thus far and signals the current mood of the market with sellers preferring not to miss out on a demand bump when presented to them.
In the stagnant conditions of global demand, the market is particularly sensitive to relatively minor changes in the exchange rate (Australian to US). With the Aussie dollar dipping back below 67¢ again, the affordability of importers was enhanced slightly, contributing to the willingness to bid higher.
Andrew Woods took a deeper look into the merino fleece market in US and Aussie dollar terms. When we think about the last 15 years, in both US dollar and Aussie dollar terms, pricing for Merino wool is near rock bottom. Historical prices, adjusted for inflation, show there to be plenty of upside when demand begins to pick up, with the “when” the key uncertainty (read more here). Could prices potentially lift 30-50% when demand improvements appear on the horizon?
Next week
A well-earned break for the wool market is ahead, sales will commence again on the 19th of August 2024.
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?
Merino component of flock under pressure
The latest release of Meat and Livestock Australia’s Industry Projections has a pertinent section on the structural shift in the national flock. Survey results continue
Battle of the Merino: South Africa vs Australia
South Africa remains the major supplier of RWS-accredited merino wool for 19 micron and broader merino wool. This article looks at the South African merino
Merino market lifts
The Merino section of the market took the credit for the modest improvement seen at auctions this week. The last two weeks of selling have
Drop in WA wool substantial but not unprecedented
Varied seasonal conditions in different regions during the past year (ranging from good to awful), low prices and the live sheep export issue in Western
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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.