Merino sheep walking out of a shed

Over 40 000 bales were sold this week as the wool trade prepares for the Winter recess. Demand from buyers has been healthy to kick off the 2023/24 season as pass-in rates remain relatively low, and prices track upward.

The Eastern Market Indicator (EMI) has improved for the second straight week, increasing by 17ȼ to finish at 1179ȼ/kg.  Buyers’ willingness to meet the market before a break in access helped to support pricing.  Avoiding the higher vegetable matter lots was a trademark of the previous season, and whilst this continues to be the case, there was plenty of desirable wool on offer this week.

Buyers in the eastern markets did not shy away from the large offering as all categories either improved or held steady in both Sydney and Melbourne.  18MPG in Sydney was up 20ȼ to 1617 ȼ/kg and 20MPG in Melbourne jumped 72 ȼ to 1381ȼ/kg.  Fine wool tracked sideways in both Sydney and Melbourne with 16.5MPG unchanged to 2005ȼ/kg and 2043ȼ/kg respectively.

In Fremantle, the broader end of the spectrum had the best week price-wise as 21MPG went 41ȼ higher to 1362ȼ/kg.  All categories improved out west resulting in the Western Market Indicator (WMI) appreciating 19ȼ to 1339ȼ/kg.

All crossbred wool categories improved this week as 28MPG in Sydney rose 10ȼ to 320ȼ/kg and 26MPG in Melbourne climbed another 24ȼ to 568ȼ/kg. Sydney cardings tracked sideways at 752ȼ/kg, Melbourne carding lost 1ȼ to 705ȼ/kg and Fremantle cardings jumped again this week, up 26ȼ to 727ȼ/kg.

With the recess approaching, a deliberately large offering of 43,697 bales made its way to auction this week.  Demand from buyers was evident as 40,373 bales were sold, and the pass-in rate (7.6%) was again relatively low compared to the previous season’s average pass-in rate of 13.2%    

This week on Mecardo, Andrew Woods continued to investigate price compression through comparisons of carding and combing prices since 2000 for Merino fleece (read here).  The current combing-carding gap is still wide and is not yet indicating prices are near their lows for this cycle, the analysis identifies that the current spread in price between the average merino combing and carding price is around 750 cents, which is well above the 400 cents level which is when the level where the cycle has historically approached its low point.

Next week

The wool trade will enter a three-week recess and sales will return on Tuesday 8th August.

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Data sources: AWEX, AWI, Mecardo

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