It was a tough start to the 2024/25 auction season, as the majority of price categories declined. As a result the Eastern Market Indicator declined 20¢ to 1125¢/kg, its lowest point since mid-October 2020.
Declines were steepest at the finer end of the spectrum in
all three markets. In Sydney, 17MPG lost
51¢ to 1630¢/kg and 18MPG lost 46¢ to 1466¢/kg. Further South in Melbourne the
finer micron losses ranged from 6¢ to 27¢.
AWI market reports cited a lack of interest from European buyers with
this week’s offering. Week to week the
available wool might not necessarily meet the requirements of these buyers but
the key macroeconomic trends impacting Europe continue to impact the wool trade
on Auction Day in Australia.
After significant decreases in Headline inflation in Europe
over 2023, for the most part, it has tracked sideways and above targets in the
Eurozone this year to date (See Figure 2). Retail
expenditure (particularly at the luxury end) tends to be one of the first to
decline in these situations and the last to return after corrections.
Comparing year on year, the first sale week saw a lower
offering but a higher pass-in rate which reflects the coy nature of bidding
this week. When we look at some key Micron percentiles (See Table 1) Fine end
wool in the Melbourne market, the drop off in pricing reflects the current
market conditions. Demand and competition from the high end just aren’t there
yet.
Per AWI and AWEX reports, Chinese demand has remained in the
current market conditions with easing prices and a lack of competition
contributing to ideal buying conditions.
This week, Andrew Woods investigated the long-term supply of
15-micron wool and changing dynamics with other comparable fibres (read
more here). From around 2000 the
supply of 15-micron wool began to pick up significantly, trending upwards to
vary between 2,000 and 3,500 greasy tonnes per season during the past decade. As the supply has increased, prices have
fallen but have remained stabilised within a range.
Next week
With auction forecasts showing relatively lower offerings in the weeks to come, alleviation of pressure from the supply end is a welcome sight to try and curtail the easing trend.
Sydney and Melbourne are selling Tuesday and Wednesday, Fremantle just Tuesday.
The increased offering of wool bales stirred a range of outcomes this week, particularly affecting the finer micron wool segments. On balance, the Eastern Market
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In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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Tricky start to season 2024/25
Declines were steepest at the finer end of the spectrum in all three markets. In Sydney, 17MPG lost 51¢ to 1630¢/kg and 18MPG lost 46¢ to 1466¢/kg. Further South in Melbourne the finer micron losses ranged from 6¢ to 27¢. AWI market reports cited a lack of interest from European buyers with this week’s offering. Week to week the available wool might not necessarily meet the requirements of these buyers but the key macroeconomic trends impacting Europe continue to impact the wool trade on Auction Day in Australia.
After significant decreases in Headline inflation in Europe over 2023, for the most part, it has tracked sideways and above targets in the Eurozone this year to date (See Figure 2). Retail expenditure (particularly at the luxury end) tends to be one of the first to decline in these situations and the last to return after corrections.
Comparing year on year, the first sale week saw a lower offering but a higher pass-in rate which reflects the coy nature of bidding this week. When we look at some key Micron percentiles (See Table 1) Fine end wool in the Melbourne market, the drop off in pricing reflects the current market conditions. Demand and competition from the high end just aren’t there yet.
Per AWI and AWEX reports, Chinese demand has remained in the current market conditions with easing prices and a lack of competition contributing to ideal buying conditions.
This week, Andrew Woods investigated the long-term supply of 15-micron wool and changing dynamics with other comparable fibres (read more here). From around 2000 the supply of 15-micron wool began to pick up significantly, trending upwards to vary between 2,000 and 3,500 greasy tonnes per season during the past decade. As the supply has increased, prices have fallen but have remained stabilised within a range.
Next week
With auction forecasts showing relatively lower offerings in the weeks to come, alleviation of pressure from the supply end is a welcome sight to try and curtail the easing trend.
Sydney and Melbourne are selling Tuesday and Wednesday, Fremantle just Tuesday.
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Data sources: AWEX, AWI, European Central Bank, 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.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
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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.