Withdrawals up as winter approaches

Mob of sheep moving in dusty yard

Wool markets opened to underwhelming demand across all centres as the trade approaches Winter and the end of the 2023/24 selling season. Although it is common for wool market volumes and prices to begin to decline, the drop was particularly steep for the finer end of the offering.

This week’s AWI market report detailed a lack of urgency amongst buyers who were present in the southern selling centre. AWEX noted that the Sydney market saw fewer buyers and a more selective strategy exhibited by those buyers that were present.  AWEX also noted that the opening decline extended across the Nullarbor, where lots of similar quality sold 20-30 cents cheaper than the previous week in Fremantle to begin the week.

Whilst the overall market saw some pricing recovery on Wednesday, the damage was done on Tuesday which saw a 20¢ decline for the Eastern Market Indicator (EMI) this week to 1152¢/kg.  Declines in Sydney were steepest, with 17MPG losing 34¢ to 1708¢/kg; however, in Melbourne, the broader categories saw some modest recoveries which helped to stem the bleeding. Melbourne 21MPG lost just 9¢ to 1328¢/kg.

After a short rally to begin the calendar year, the fine wool premium has continued to decline and the results in the Melbourne market this week demonstrate this. Figure 1 shows the Melbourne market 17MPG, 21MPG and the basis for both. The premium for 17MPG over broader 21MPG wool has narrowed to just 385¢/kg, a level not seen since 2020.

Although the losses were not as steep on the West Coast, the market did concede ground with the Western Market Indicator (WMI) dropping 15¢ to 1287¢/kg. Sensing the tide had turned on them, more sellers opted to withdraw lots on Wednesday, leading to a withdrawal rate of 9.5% in WA and the pass-in rate surpassed 10% for the week.   

Next week

Figure 2 shows the seasonality of wool bales sold at auction, and typically the next few months to the end of June volumes decline. As the wool market awaits meaningful demand signals from the global economy, the key to avoiding steep pricing declines will be to avoid supply shocks to the market.

Next week a higher offering of 41K bales is forecast, however the forecast volumes for the next few weeks are lower than the same sale week last year which could help. All centres are selling on Tuesday and Wednesday next week.

Have any questions or comments?

We love to hear from you!

Click on graph to expand

Click on graph to expand

Click on graph to expand

Data sources: AWEX, AWI, Mecardo

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
Flock of merino sheep close up

The luxury goods complex

Fine wine is a luxury item with, it turns out, some quite good indicator series for the past couple of decades. In this article, we

Read More »

Want market insights delivered straight to your inbox?

Sign up to the mailing list to get regular updates to new analysis and market outlooks

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
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.

Photo of a farmer surrounded by Merino sheep in dusty yards
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. 

Image of harvested grain pouring into a chaser bin

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.