With much lower supply already flagged last week for the wool market, prospects looked favourable heading in. The result exceeded expectations with all micron categories improving week on week and the Eastern Market Indicator (EMI) jumping 30¢ to 1225¢/kg, it’s highest value since May 2023.
A 22% decline in the offering was just what the doctor ordered, and buyers were eager from the jump to push bids higher. Sellers were not willing to look a gift horse in the mouth, and the majority of wool cleared as the pass in rate fell drastically to just 3% this week with 31626 bales selling.
In Sydney merino MPG gains ranged from 22¢ – 55¢ with 18MPG rose 51¢ to 1618¢/kg. Melbourne’s gains ranged from 28-59¢ as 19MPG gained 43¢ to 1512¢. The good fortunes for wool also headed west over the Nullarbor as the Western Market Indicator gained 35¢ to 1394¢/kg and gains ranged between 30-59¢. 21MPG in Fremantle increased 30¢ to 1468¢/kg.
Crossbred wool gains were more modest with 28MPG best on ground with a 14¢ price rise to 427¢/kg.
The impact of meaningful supply easing was felt this week, but for longer term prospects, the best outcome for wool prices is when there is synchronised economic growth from the major global economies of the US, China and the EU. This Week on Mecardo, Andrew Woods provided an update on the economic situation of these regions to ascertain any signals of sustainable price increases for wool. German and Chinese economic data continues to underwhelm, but US bond yields look promising for some respite in wool pricing in the coming 12 – 18 months (Read more here).
Wool auctions this week capitalised on a 0.62 AUDUSD exchange rate like clockwork. However, the exchange rate has pushed back to US 63¢ late this week. Initial reactions would be for prospects to look less favourable next week in response, but if markets are expecting the US dollar to weaken further in the future (and our exchange rate strengthens), this week’s momentum could consolidate. The key right now for export buyers is to avoid being on the wrong end of an Aussie dollar rally.
The week ahead….
Higher supply and a higher Aussie dollar for next week might spoil the party of this week’s great result (and has done in previous weeks).
The market, however, must account for continued volatility in the US dollar as trade disputes roll on, some buyers might be keen to buy now if they suspect that the beginning of 2025 was the low for the exchange rate.
Sydney and Fremantle are selling Tuesday and Wednesday, Melbourne, Wednesday and Thursday.
Synthetic fibres rely heavily (like most supply chains) on Oil, and the conflict in the Middle East presents a number of challenges for agricultural markets,
The mention of an El Nino has the scribes seeking forecasts and projections for agricultural commodities through production to price. This article takes a look
The main southern hemisphere wool exporters (from west to east; South Africa, Australia, New Zealand, Argentina and Uruguay) are by default the major suppliers of
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Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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Wonder week for wool
A 22% decline in the offering was just what the doctor ordered, and buyers were eager from the jump to push bids higher. Sellers were not willing to look a gift horse in the mouth, and the majority of wool cleared as the pass in rate fell drastically to just 3% this week with 31626 bales selling.
In Sydney merino MPG gains ranged from 22¢ – 55¢ with 18MPG rose 51¢ to 1618¢/kg. Melbourne’s gains ranged from 28-59¢ as 19MPG gained 43¢ to 1512¢. The good fortunes for wool also headed west over the Nullarbor as the Western Market Indicator gained 35¢ to 1394¢/kg and gains ranged between 30-59¢. 21MPG in Fremantle increased 30¢ to 1468¢/kg.
Crossbred wool gains were more modest with 28MPG best on ground with a 14¢ price rise to 427¢/kg.
The impact of meaningful supply easing was felt this week, but for longer term prospects, the best outcome for wool prices is when there is synchronised economic growth from the major global economies of the US, China and the EU. This Week on Mecardo, Andrew Woods provided an update on the economic situation of these regions to ascertain any signals of sustainable price increases for wool. German and Chinese economic data continues to underwhelm, but US bond yields look promising for some respite in wool pricing in the coming 12 – 18 months (Read more here).
Wool auctions this week capitalised on a 0.62 AUDUSD exchange rate like clockwork. However, the exchange rate has pushed back to US 63¢ late this week. Initial reactions would be for prospects to look less favourable next week in response, but if markets are expecting the US dollar to weaken further in the future (and our exchange rate strengthens), this week’s momentum could consolidate. The key right now for export buyers is to avoid being on the wrong end of an Aussie dollar rally.
The week ahead….
Higher supply and a higher Aussie dollar for next week might spoil the party of this week’s great result (and has done in previous weeks).
The market, however, must account for continued volatility in the US dollar as trade disputes roll on, some buyers might be keen to buy now if they suspect that the beginning of 2025 was the low for the exchange rate.
Sydney and Fremantle are selling Tuesday and Wednesday, Melbourne, Wednesday and Thursday.
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Click on graph to expand
Click on graph to expand
Data sources: AWEX, Nutrien Ag Solutions, Mecardo
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Have any questions or comments?
Potential for wool to follow synthetics higher?
Synthetic fibres rely heavily (like most supply chains) on Oil, and the conflict in the Middle East presents a number of challenges for agricultural markets,
Return to normal volumes boost prices
The Wool market rose again this week by 51¢ taking the EMI to 1767¢. Supply this week was lower after the previous weeks return sale
Another look at the implications of an El Nino on rainfall
The mention of an El Nino has the scribes seeking forecasts and projections for agricultural commodities through production to price. This article takes a look
A look at southern hemisphere merino wool production
The main southern hemisphere wool exporters (from west to east; South Africa, Australia, New Zealand, Argentina and Uruguay) are by default the major suppliers of
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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.
MEET THE TEAM
Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
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.