Australian Wool Volumes Up from Previous Year

Australian Wool Volumes Up from Previous Year

Prices at the Australian wool market have struggled this year, however during the month of October a level of stability became evident. And although wool producers would obviously prefer higher prices, the pass in rate is indicating that they are now opting to meet the market and sell, rather than hold onto their clip according to the latest report from Australian Wool Innovation (AWI). 

Industry analysts believe this is likely due to producers’ cashflow requirements because of lower commodity prices and seasonal conditions becoming dryer. According to analysts, demand for Australian wool is not expected to pick up over the coming months due to consumer demand continuing to wane as challenging economic conditions and global tensions carry on. They also predict supply will deplete over the coming months after a period of high stock of wool placed downwards pressure on the market.

 Fine Merino types were the main culprits setting the downward pressure on premiums. Broader wool prices have weakened as demand declined compared to the same time last year with volumes remaining relatively unchanged. Crossbred wool demand has seen some improvement, but data showed volume sold has increased and therefore put downward pressure on the price.

Since the start of the selling seasons all Merino micron groups have suffered losses between 6 to 9pc with the superfine types most affected. October saw 193,514 bales offered nationally, with an average pass in rate of 7pc across the month – that is a reduction of 3pc month-on-month. October AWTA core test volumes were higher by 15.1pc compared to October 2022 with all major categories except 21-22 micron following the trend. This is believed to be due to shearing sitting well ahead compared to a year ago due to favourable conditions, not an increase of sheep numbers or clean fleece weights as fibre diameter is in fact falling for both Merino and adult crossbred wool.

The EMI remained relatively unchanged at the end of October as strong bidding for higher quality fleece was balanced out by discounts for less-than-ideal lots. As wool supply continues its shift finer and the incidence of vegetable matter in fleece decreases overall, the scrutiny of buyers will become increasingly important. And finally, with the Australian flock set to contract this season, this means lower sheep numbers in 2024-25 for slaughter and a lower wool supply. Exactly how this will affect wool supply will depend on changes to the different sheep categories of the flock. This ought to be positive news for both sheep and wool prices.

Source: AWI