Supply overwhelmed the first week of the new selling season as a big offering of wool for sale was met with a softer market. The cheaper Australian dollar wasn’t enough to overlook the concern with commodity prices tanking around the globe.
The Eastern Market Indicator dropped 23¢ or 1.6% over the week, settling at 1407¢/kg. For comparison, at the end of the first week of the 2021/22 season the EMI was slightly higher at 1420¢/kg. The Australian dollar continued to trend lower alongside the crash in many commodities on the fear of recession. At 0.6796 USD the Aussie is at the lowest level in over two years. In US terms, this pushed the EMI 31¢ lower to 956¢/kg.
Fremantle wasn’t immune to the market pressures. It faced the largest losses of all three centres. The Western Market Indicator shed another 43¢ to 1486¢/kg.
Continuing the trend of last week, all medium to fine fibres recorded losses. Fine wools in Melbourne were down 25 to 60¢, and 30 to 50¢ in Sydney. 20MPG in Melbourne avoided the significant falls, but was still 7¢ softer. The damage in Sydney was done on the first sales day, with some MPG’s recouping some of the earlier losses on Wednesday due to better quality wool.
Results were mixed amongst crossbred wools. The 26 MPG recorded a 14¢ gain to 705¢ while 28-30 MPG moved slightly lower. Merino cardings dropped 9 and 10¢ respectively in Melbourne and Sydney, and improved 2¢ in Fremantle.
Despite the weaker market, less wool was passed-in at auction compared to the week prior. The national pass in rate of 14.8% saw 41,607 bales sold.
While the 2021/22 is now behind us, our analysis this week looked at how the full season fared for crossbred, fine & broad Merino wool compared to history. Supply chain expenditure on fine merino wool was the third highest since the mid-1990s last season. While the gross sales value of crossbred wool picked up slightly last season, it remains at half of the level enjoyed in the eight seasons to 2018-19.
The week ahead….
The last sale before the three week recess is expecting 61,054 bales on offer across the three selling centres. As noted by AWEX, this will be the largest week of sales since week 36 in 2019/20 if the quantity eventuates.
Premiums for quality assured wool, non-mulesed wool, are the bright light in the wool market at present, with feedback continuing to indicate demand in excess
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Tanking commodity prices doesn’t help
The Eastern Market Indicator dropped 23¢ or 1.6% over the week, settling at 1407¢/kg. For comparison, at the end of the first week of the 2021/22 season the EMI was slightly higher at 1420¢/kg. The Australian dollar continued to trend lower alongside the crash in many commodities on the fear of recession. At 0.6796 USD the Aussie is at the lowest level in over two years. In US terms, this pushed the EMI 31¢ lower to 956¢/kg.
Fremantle wasn’t immune to the market pressures. It faced the largest losses of all three centres. The Western Market Indicator shed another 43¢ to 1486¢/kg.
Continuing the trend of last week, all medium to fine fibres recorded losses. Fine wools in Melbourne were down 25 to 60¢, and 30 to 50¢ in Sydney. 20MPG in Melbourne avoided the significant falls, but was still 7¢ softer. The damage in Sydney was done on the first sales day, with some MPG’s recouping some of the earlier losses on Wednesday due to better quality wool.
Results were mixed amongst crossbred wools. The 26 MPG recorded a 14¢ gain to 705¢ while 28-30 MPG moved slightly lower. Merino cardings dropped 9 and 10¢ respectively in Melbourne and Sydney, and improved 2¢ in Fremantle.
Despite the weaker market, less wool was passed-in at auction compared to the week prior. The national pass in rate of 14.8% saw 41,607 bales sold.
While the 2021/22 is now behind us, our analysis this week looked at how the full season fared for crossbred, fine & broad Merino wool compared to history. Supply chain expenditure on fine merino wool was the third highest since the mid-1990s last season. While the gross sales value of crossbred wool picked up slightly last season, it remains at half of the level enjoyed in the eight seasons to 2018-19.
The week ahead….
The last sale before the three week recess is expecting 61,054 bales on offer across the three selling centres. As noted by AWEX, this will be the largest week of sales since week 36 in 2019/20 if the quantity eventuates.
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Data sources:
AWEX, AWI, Mecardo
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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.
MEET THE TEAM
Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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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.