Wool in shearing shed

Vegetable Matter (VM) or vegetable fault in wool is a function of regional location. As a rule, in the drier regions with more irregular rainfall, broader merino wool is grown. VM levels are higher in these regions, therefore VM levels should be higher in broader merinos. The bulk of vegetable fault (VM) comes from the eastern states, so this article will focus on eastern VM levels.

As previously discussed in the article two weeks ago, VM models shown here are based upon pasture growth rate (PGR) data from the Long Paddock website https://www.longpaddock.qld.gov.au/ .

Figure 1 shows the eastern average VM level for 20-22 micron merino wool from 1998 to 2023, based on data from wool sales at auction. Overlaid on the graph is a model for this VM level based on Long Paddock pasture growth rate (PGR) estimates from eastern pastoral regions. The model provides some short-term forecasting ability as the PGR data is lagged by six months, currently giving us a forecast through to early next season.

In Figure 1 the big fluctuations in the average VM level for broader merino wool stand out, swinging from 1.5% to 4.4%, based on multi-year cycles rather than within-year seasonal patterns. The model shown is pointing to the VM level in mid-2023 returning to levels on par with recent cycle highs in 2011 and 2017.

For the finer merino micron categories, seasonal patterns in the VM level are much stronger. Figure 2 shows the average VM for eastern 16–18 micron merino wool, for the same period as Figure 1. The model overlaid in Figure 2 is of a similar structure to the model in Figure 1 except that it draws on PGR data from all eastern regions, weighted for wool sales volume.

As a rule, the finer merino VM level is lower than in broader merino, although, in times of severe drought, the difference shrinks to near zero levels. The seasonal variation in VM in the finer merino categories is an extremely strong feature of supply. The years of extremes, seen in Figure 1, are reflected in Figure 2 beneath the seasonal pattern. The model in Figure 2 is also pointing to higher VM levels, on par with past peaks, for mid-2023.

From a processor perspective, the seasonal patterns in fine merino VM levels offer a regular opportunity within seasons, to buy suitable wool, although some years can be more difficult than others. For processors of broader merino wool, the picture is quite different with VM levels after the 1990s missing any seasonal pattern of consequence. For these categories, VM levels can be elevated or depressed for extended periods.

What does it mean?

The presence of a strong seasonal supply pattern in finer merino categories means that discounts for finer merino wool with higher VM levels will usually find some respite towards the middle of the selling season. For broader merino categories the VM supply cycles are slower moving with VM levels staying at elevated or depressed levels for up to two years at a time. Seasonal patterns of supply are not a factor in broad merino VM supply.

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Key Points

  • Broader merino wool generally has higher VM levels than finer merino wool, except following major droughts.
  • Finer merino categories have a strong seasonal pattern in their VM levels, while broader merino categories do not.
  • This poses increased challenges for processors of broader merino wool, especially in years following good seasons in the eastern pastoral zones (such as in 2023).

Click on figure to expand

Click on figure to expand

Data sources: AWEX, Long Paddock, ICS, Mecardo

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