It was another consecutive week of decline for the East Coast Indicators (Figure 1), as the Eastern Market Indicator (EMI) declined 13ȼ this week to finish at 1163ȼ/kg and is down 13% year on year. The Australian dollar reached a low tide mark for 2023 earlier this week, which has contributed to a steeper decline to the EMI expressed in US$, a drop of 21 ȼ to 750 USȼ/kg.
For the fine and medium categories, 16.5MPG in Sydney was the sole micron indicator that increased this week, up 3ȼ and sitting at 2000 ȼ/kg. The general downward trend continued on the back of supply pressure with a significant offering in both Northern and Southern markets. 18MPG dropped 44 ȼ to 1583 ȼ/kg in Sydney and fell 41 ȼ to 1577 ȼ/kg in Melbourne. The fine wool premiums that typified the strong market conditions in 2021 and 2022 continue to decline, as we can see in Figure 2, with basis between 17 and 21 MPG tracking downward. 21 MPG in Melbourne fell 48 ȼ to 1334 ȼ/kg.
Price declines in the Western markets this week were more subdued than those on the East Coast, as we enter the historical quiet season in WA. Support for pricing in WA was driven by supply as withdrawals reached 7.1%. It was evident that vendors did not want to find out the hard way where pricing could potentially have slipped to. 18MPG in Fremantle lost 19 ȼ to 1549 ȼ/kg and 21MPG eased 9ȼ to 1341 ȼ/kg. The Western Market indicator (WMI) overall saw a 12ȼ drop to 1320 ȼ/kg which is 10% down on the previous year.
Crossbreds had a mixed week, but we will take an incremental price gain in some micron categories when we can get it. The 28MPG in Melbourne increased 5ȼ to 340 ȼ/kg. Sydney cardings lost 18 ȼ to 734 ȼ/kg and declined by 8ȼ in both Melbourne (704 ȼ/kg) and Fremantle (743 ȼ/kg).
The offering was significant at 46,367 bales but the market did not shy away from the task as 41,298 bales were sold with the pass-in rate reaching 10.9% nationally. The pass-in rate for the start of this season (8.6% on average since sales week 1) is noticeably lower than the previous seasons (an average of 15.3% at the same time last season). The weekly average of bales sold in these first four sales is just over 40K and is only 7% below the weekly average for the same time period in the previous season.
This week on Mecardo, Andrew Woods provides an update on the South African Wool clip (read here), which is 12% the size of the Australian clip, broader and shorter in staple length.
While the market has changed since this time last year with economic stagnation, the buyers’ willingness to get to where bids need to be to get a sale and consistent volumes moving through the auction system suggest expectations for buyers and sellers are being met.
Fremantle will not have a sale next week, and Sydney and Melbourne will sell an offering around the 39k bale mark across Tuesday and Wednesday.