Western wool gets up off the canvas

Merino sheep in front of gate

After last week’s sale, it seemed a daunting volume of wool was headed for the market again this week. This week’s sizeable offering was negotiated with relative calm as the brakes were pushed on the wool market’s downward momentum, for this week at least.

The Eastern Market Indicator (EMI) experienced just a slight decline of 5ȼ to finish at 1209 ȼ/kg. A welcome pause to the autumn slide as the EMI finds itself down 16% year on year. The EMI expressed in US$ dropped 16ȼ to 785 USȼ/kg, the last time the US$ EMI was at this level was in October 2020.  

In Sydney, pricing results were mixed. 17MPG was up 9ȼ to 2067ȼ/kg meanwhile 20MPG was down 10ȼ to 1385ȼ/kg. A positive sign however for those in this market is that pricing did not suffer extreme drops despite the lowest pass-in rate (7.3%) and withdrawal rate (3.2%) in the country. In Melbourne, multiple price guides in the fine and medium range received a sugar hit. 18MPG rose 33ȼ to 1758ȼ/kg and 20MPG fared 8ȼ better to 1406ȼ/KG. A 20ȼ decline in 16.5 MPG to 2242ȼ/kg, however, impacted overall market strength as the southern market indicator finished 5ȼ lower to 1169ȼ/kg.

With Fremantle having a sales break next week, it was important to bounce back after a downward trend over the last month. With all price guides improving, (with some supply-side help as 37% was withdrawn) this week’s result will be well received as the Western Market Indicator appreciated 29ȼ to 1366ȼ/kg. 18MPG in Fremantle improved 28ȼ to 1720ȼ/kg.  Out west sellers have been willing to walk if pricing did not meet expectations on sale day. A strategy that is likely to continue after the break with Western MPG percentiles delicately balanced in the 50th-53rd percentile range. Essentially since 2010 in WA, half the time prices have been better, and half the time prices have been worse than they are right now.

Crossbred markets continue to dig deeper, with 26MPG in Melbourne pushing 20ȼ lower to 522ȼ/kg. 28MPG in Sydney sits at 298ȼ/kg (down 12ȼ).  Speaking of percentiles, the latest updates available to read on Mecardo (read here), we are pushing new lows since 2010 for crossbred wool. 26MPG, 28MPG in Melbourne, and 28MPG in Sydney are the lowest they’ve been since 2010.

Cardings this week ended at 732ȼ in Sydney (down 7ȼ), 738ȼ in Melbourne (down 23ȼ), and bounced back in Fremantle at 723ȼ (up 29ȼ). 

Of the 40,106 bales offered this week, the market cleared 35,417 bales as the pass-in rate finished at 11.7% nationally.  Whilst the downward pricing trend of the previous month or so would be of concern to sellers, confidence can be taken from the market’s ability to clear significant volumes of wool.  The weekly average bales sold figure is currently at 36,638 for this season (2022/2023) and the 2017/2018 season was the last season where the weekly average was higher (39,253).  

This week on Mecardo, Andrew Woods investigated the impact of  El Niño on sheep offtake (read here). Eastern Australia and Western Australia tend to be impacted differently by El Niño, particularly in the context of sheep offtake.  Going on the record of the past two decades, an El Niño year in 2023 would flag a shrinkage in the Eastern Australian flock somewhere between 2% and 8%, depending on spring rainfall.

Next week

No sale next week in Fremantle. Sydney and Melbourne are both selling Tuesday and Wednesday with a likely offering of 36 300 bales.

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Data sources: AWEX, AWI, Mecardo

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