Merino wool sheep grazing

Exporters, when constructing consignments, have to pay attention to both price and specifications (micron, staple length, and staple strength, pointy of break in the middle and such). Yield is not usually a major constraint on building consignments but has been so in 2020. This article takes a look at yield in the Australian wool clip.

Yield in the Australian clip reflects seasonal conditions in the preceding 12-18 months of being shorn.  There is a normal seasonal variation in yield, with the highest levels around the Christmas recess (at the end of the Australian spring) and the lowest levels around May (at the end of the Australian autumn).  Major variations in seasonal conditions simply lift or lower this seasonal pattern.

In figure 1 the eastern Australian average month Merino fleece wool yield is shown for periods of 18 months for the drought years of 2002, 2006 and the mixed years of 2015-2019 along with the past 18 months 2019 into 2020. The point here is that the full effect on yield of drought, which is primarily a failed spring in south eastern Australia, is felt in the following summer/autumn. 

The seasonal pattern mentioned above shows up in Figure 1. It also shows that wool yield in 2019 and into 2020 has been tracking well below (by the order of 3-4%) previous drought levels which analysis from The University of Melbourne suggests is entirely logical (View here).

To demonstrate how the change in yield affects different yield levels, Figure 2 shows the yield distribution for March through to June (so far) 2020 compared to the average distribution for the past decade (left hand scale). Processors set their machinery to suit average specifications of wool they buy so this graph gives a feel for how far out of the norm the current yield distribution is. In addition to the issue of low yields themselves, is the extra constraint placed on the building of consignments, already tough enough in a time with limited supply and even more limited demand.

Figure 3 compares the yield distribution (all wool) for the March to June period in 2020 with the same period in 2017, following good seasonal conditions in 2016. This comparison shows that following a good season there is a lot less wool with a yield below 60%, and a lot more wool with a yield above 63-64% for exporters to draw from. Hopefully, the yield distribution in 2021 will follow that of 2017.

What does it mean?

Yield in the greasy wool market has been low for the past 18 months, with the dip down this autumn in line with past seasonal patterns but supercharged by drought in the years leading up to this autumn. To what level yield recovers in the new season will depend on spring 2020 rainfall, but the spring should bring some relief in terms of discounts for low yield (although that is a relative term). There is a reasonable chance that a lot of the wool in the growing farmer stockpile will be lower yielding, so the supply of this wool will continue to dribble into the market for some years yet.

Have any questions or comments?

We love to hear from you!

Key Points

  • The average Merino fleece yield in eastern Australia has been running 3-4% below earlier drought levels during the past 18 months.
  • Yield will naturally increase in the next six months, in line with normal seasonal patterns.
  • How far yield recovers depends greatly on spring rainfall.

Click on graph to expand

Click on graph to expand

Click on graph to expand

Data sources: AWEX, ICS

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

Wool warms to Winter

Last week’s positive move continued with the market posting gains across all MPG’s, with the exception of 16.5 MPG in Melbourne which eased slightly. This

Read More »

Bale breakdown for May

Wool supply is one of the key components of the greasy wool market, and the greater supply chain, which we can monitor closely as the

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.