Prices at the finer end easing and broader categories firmer was a characteristic of both the Sydney and Melbourne markets this week, as has been the case (for the most part) this season. With all micron categories declining recently, it becomes easy to lose sight of the underling trends driving the market and become fixated on the immediate outcomes. However, with an unchanged EMI this week, it provides an opportunity to pause to assess what direction the wind is blowing.
As detailed by Mecardo previously, the shift in supply towards
a finer average micron in early 2024 has been contributing to the steeper price
declines in finer micron categories. This
financial year, 17MPG in Melbourne has lost 140 ȼ/kg; 21MPG in Melbourne is 12ȼ
higher in the same period. In Figure 1 we can see the 17 MPG in Melbourne
approaching the 21MPG and the basis between the both has come in considerably
in the last 12 months as a result, (a decline 475ȼ or 52% lower).
This week In Sydney, 17MPG lost
5ȼ to 1757ȼ/kg and In Melbourne, 17MPG lost 9ȼ to 1755ȼ/kg. 20MPG in Sydney
improved 6ȼ to 1348ȼ/kg and 21MPG in Melbourne gained 2ȼ to 1321ȼ/kg.
Demand for wool has been a bear that refuses to be poked. Signs
of economic recovery that the wool trade has been searching for, are yet to
appear. In an easing market, bidders will still be eager to secure stock, but a
momentum shift is needed to push prices up. This week’s demand was steady with a
consolidation of volumes sold (just a 1.7% decline Week on week) and an
unchanged pass-in rate (steady at 9.5% nationally).
Whilst total wool supply doesn’t necessarily impact the relative
performance of individual micron categories, auction offerings have been ahead
of schedule this season, contributing to an easing market. This could be about to change, a month ago
total season offerings were 6.7% higher year on year, this week the number is
just 1.6% higher than last year. Further
to this, offerings and volumes sold are typically higher at this time of year
(see Figure 2).
Next week
With the foot off the gas momentarily for auction volumes, it will be interesting to see if this has an impact on the rate of the fine wool premium declines. It is likely that premiums will still receive some downward pressure as we move forward, but the peak periods of this pressure are likely to dissipate after Quarter 2.
Sydney’s designated superfine sale will be watched keenly to identify whether fine wool premiums continue to decline steeply or are approaching a steadier state.
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
In mid-2022 Mecardo looked at the international supply of sheep meat (albeit from a limited number of countries) showing how lower supply had positively correlated
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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.
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Wool market catches its breath
Next week
With the foot off the gas momentarily for auction volumes, it will be interesting to see if this has an impact on the rate of the fine wool premium declines. It is likely that premiums will still receive some downward pressure as we move forward, but the peak periods of this pressure are likely to dissipate after Quarter 2.
Sydney’s designated superfine sale will be watched keenly to identify whether fine wool premiums continue to decline steeply or are approaching a steadier state.
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Click on graph to expand
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Data sources: AWEX, AWI, Mecardo
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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.
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.
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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.