Tight supply underscores wool’s ongoing surge

Merino fleece categories recorded triple-digit gains across all selling centres. In Sydney, the 17 MPG increased by 180¢ to 2,250¢/kg, while the 18 MPG rose by 135¢ to 2,100¢/kg. Melbourne reported the 17.5 MPG up 164¢ to 2,197¢/kg and the 19 MPG up 151¢ to 1,931¢/kg. Fremantle saw similar strength, with the 17.5 MPG increasing 165¢ and the 18 MPG up 154¢. Broader Merino categories also advanced, with the 20 MPG rising by around 129. Crossbred fleece finished the week 60 to 70¢ higher, while cardings closed with smaller gains, ending 5 to 15¢ stronger, with the Sydney MC finishing at 823¢/kg clean.

This week’s national offering reached 34,597 bales, with 33,892 sold and only 2% passed in. Clearance rates were high across all centres, with Sydney at 97.8%, Melbourne at 98.1% and Fremantle at 98.6%. Despite this strong weekly clearance, broader supply remains constrained. Interestingly, ATWA data reported that wool volumes tested from July to September were 16.1% lower than the same period last year, with September alone down 13% year-on-year. This indicates that the pipeline of wool available for sale is materially tighter than last season. Even though weekly offerings have lifted in recent sales, the overall supply base remains constrained, meaning buyers are competing over a smaller pool of fibre.

This week in Mecardo, Andrew Woods examined the 21 MPG, where supply has fallen sharply over the past three decades (see article here). He showed that about two-thirds of the variation in its price can be explained by this flock contraction when measured against non-wool fibre prices.  He found that September’s average of 1,407c/kg clean was close to the modelled fair value of 1,448c, suggesting prices are now aligned with fundamentals.