Premiums for quality scheme-accredited wool continue in the greasy wool market. This article takes a look at RWS premiums during the past three months.
Calculating premiums for various quality schemes remains a
challenge as many lots are accredited to more than one scheme. As a consequence,
this article focuses on RWS wool-accredited wool (which often includes
Authentico accreditation).
Figure 1 shows RWS premiums for 19.5-micron merino fleece
published by Cape Wools for the South African greasy wool market along with
calculated weekly premiums for 19.5-micron fleece in the Australian auction
market for the past three years. In April, Mecardo looked at how these premiums
have changed during this period. In recent months the premiums have increased
slightly and burst onto the Merino locks market, in a manner similar to
2021-2022.
Figure 2 shows the median (circle) and range in price
effects for RWS accredited MPG type fleece wool during the past three months,
ranging from 15 to 21.5 micron in Australia. A lot of the median levels are
close to 50 cents per clean kg. The range in price effect varies, which is
normal, depending on the supply of wool on a given sale day and the demand
present.
In recent months good quality merino locks have been picking
up significant premiums. Feedback indicates it is a similar story for the noils
market. What is interesting about these premiums is the background extreme
weakness in the locks and noils market. Figure 3 shows the median and range in
premiums for RWS-accredited Merino locks compared to comparable non-mulesed Merino
locks, during the past three months. The median premiums range between 100 and
300 cents clean per kg, averaging around 30-35% of the base price. That is a
big premium by any standard.
As a refresher to where RWS-accredited wool is being sourced
by the supply chain, Figure 4 shows weekly volumes of RWS-accredited merino
wool sold in Australia, South Africa and New Zealand wool sold at Melbourne
auctions during the past 12 months. From these sources one-third is Australian
and 60% is South African. South Africa remains the dominant supplier of RWS-accredited
merino wool.
Interest in RWS crossbred wool is reported but Australian
volumes remain at low levels. While New Zealand sold some 2000 bales of RWS-accredited
crossbred wool in Melbourne last week, in their first offering for the season,
Australian sales totalled 66 bales.
What does it mean?
Merino fleece premiums for RWS-accredited wool looked to have firmed slightly in recent months, although the demand is focused on better quality wool. Large premiums have turned up for merino locks, which given the experience of the large RWS premiums seen in 2022, are unlikely to persist. The experience of recent years suggests these premiums will shrink back to more sustainable levels at some stage. Demand for accredited crossbred wool is reported but the supply in the Australian market is negligible.
Key Points
- RWS premiums for good merino fleece look to be around 50 cents per clean kg, as an average.
- For good merino locks RWS premiums in recent months have been between 100 and 300 cents per clean kg.
- There is demand reported for RWS-accredited crossbred wool but there is little Australian supply (40-66 bales per week during the past four weeks of sales).
Click on figure to expand
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: AWEX, Cape Wools, RBA, ICS, Nutrien, Mecardo
