Shear stability despite currency fluctuations

This currency weakness boosted the attractiveness of Australian wool to foreign buyers, with the AWEX Eastern Market Indicator (EMI) closing at 1,186 cents. While this reflects a 4¢ weekly reduction, it marks a 42¢ gain from the same period last month, highlighting currency-induced strength over fundamental demand shifts which sees buyers jumping in while it’s good value. The USD 21 MPG remained steady this week, while the 28 MPG traded within the AUD 370–380 range.

Despite a market lull, this week 46,004 bales were sold, which marked the highest weekly total since April 2024. This robust trading activity during a cyclical low suggests buyers and sellers are finding comfort at current price levels. Given that supply pressure has not triggered a downturn, this is providing some reassurance amid ongoing uncertainty.

 
On a similar note, Merino fibres experienced modest losses in AUD terms this week. The movements in the MPGs for Merino fleece ranged between + 7 and -34¢. Results were mixed for Crossbreds, but 25 & 26MPGS notably lost 11 and 15¢ this week, respectively. The market is still in a holding pattern, with buyers and sellers cautiously assessing the global political and economic landscape. The coming period will be important in deciding whether this stability will translate into renewed price momentum or further consolidation.

While demand remains a key factor, supply-side dynamics also play a crucial role in shaping the wool market. Andrew Wood’s market analysis of the Chinese sheep flock and wool clip highlights a potential shift in the supply-demand balance (read here). While the Chinese sheep flock has grown, the fine wool component of the clip has been declining for the last decade.