Sheep running in a yard

An appreciating Aussie dollar and softening demand from buyers have culminated in a second straight weekly decline in the wool market. Sellers sensed the tides were turning and voted with their feet as the pass-in rate increased to its highest mark since November last year. All micron categories were pushed downward in all centres, with discounts for high VM lots commonplace. Bales sold and the Eastern Market Indicator (EMI) both hit their lowest level so far this calendar year.

The EMI fell significantly this week to 1317 ȼ/kg, a decline of 41ȼ. When expressed in US$ the EMI was down 21ȼ to finish at 874 ȼ/kg (US).  Pressure on the EMI was exacerbated by the slight increase in the Australian dollar, which lifted to 66.35 ȼ (US).

Out west it was a similar story with the Western Market Indicator (WMI) down 51 ȼ to finish at 1445 ȼ/kg.  Sellers in this market opted to sit out and try their chances another week in response to the pummelling happening to its eastern counterparts, and WA pass-in rates reached 27% as a result.   

Finer categories were not immune to the falls, with 17MPG declining 96ȼ to 2262 ȼ/kg this week in Sydney.  Melbourne 17MPG followed suit down 84 ȼ to 2318 ȼ/kg.

Crossbred wools were also in decline with 28MPG softening 17 ȼ to 340 ȼ/kg in Sydney and 26 MPG down 47 ȼ to 568 ȼ/kg.

Cardings in Fremantle declined 51 ȼ, and Melbourne and Sydney’s cardings were down 22 ȼ and 4 ȼ respectively.

The story has been significant volumes of bales offered this calendar year, and up till this point there was enough support in the market.  This week however the 44049 bales offered found themselves in a dramatically weaker market.  As a result, pass-in rates increased 48% week on week to reach 19.3%, a high mark this calendar year. Furthermore, weekly bales sold fell below the seasonal weekly average (36 600) as the market cleared 35 531 bales this week (down 15% week on week).

This week on Mecardo, Andrew Woods investigates Australian Merino supply, in particular the lower supply of broader micron categories influence on price ratios for Merino wool.  Increases in price ratios for merino wool look to be more or less permanent due to the declining merino supply in the Australian wool clip.

The week ahead….

There are currently 46 274 bales rostered for sale next week, and all centres are back to selling on Tuesday and Wednesday. Melbourne will have a Thursday sale.

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Data sources: AWEX, AWI, Mecardo

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