Australian Wool selling season closes not far from where it opened
The wool market’s benchmark Eastern Market Indicator (EMI) opened and closed the 2023-24 selling season relatively alike with minimal movement across the year. The season opened at 1126 cents per kilogram, gaining just 16 cents across the 12 months to close off at the end of June at 1142c/kg.
In percentage terms this equated to a small 1.4 per cent increase. When viewed in US terms, the EMI movement was similar. The EMI opened the season at US748c/kg and closed at 763c, a rise of 15c – or a 2pc gain. For most of the year the EMI traded around the mid 1100c/ kg range. But compared to year ago levels, the individual micron variance indicated prices remained well back.
And the end story was, unfortunately, for most of the 12 months, finer microns suffered the larger losses for the season. In contrast, the medium to course wool types proved the least volatile. Weekly fluctuations, albeit relatively stable, were brought about by a combination of foreign exchange rates, supply variance and buyer demand. Supply and auction clearance rates remained relatively steady across the selling season as producers largely met the market and parted with their clip, keeping the pass in rates below 10pc for most of the year.
The total dollar amount of wool sold for the season was $2,228 million. This was $179 million or 7.4pc less than the previous season, due mainly to the smaller volume offered. This decline was in line with analyst forecasts that the mature sheep flock would produce a smaller clip to the prior year. So, what is next on the horizon for the Australian wool market? Wool selling season closes not far from where it opened The Australian wool supply is expected to stay flat to slightly down for the coming season.
The first forecast delivered by the Australian Wool Production Forecasting Committee for 2024/25 predicted national wool production of 306Mkg greasy, a reduction of 5.8pc on the 2023/24 season. A 6pc reduction in total number of sheep shorn over the new season has also been forecast, bringing the number of sheep shorn down by 67.3 million head. The average cut per head is expected to sit at 4.55kg/head great, similar to the 2024/25 season.
When it comes to a price recovery, it may not be all good news. Consumer demand and global economic conditions will hold the key to wool price recovery for Aussie wool producers. Those challenging economic conditions will continue to supress demand for Australian Merino wool over the coming season. And according to industry analysts the overall path for the Chinese economy remains downward.
Weak Chinese domestic demand is not good news for Australian wool due to the large percentage of wool that has historically been purchased by the Chinese consumer. But as spoken about in earlier AWI monthly market intelligence reports, alternative markets are not out of the question, particularly with the Australian industries continuing to focus on wool as a versatile fabric for a variety of climates.
As far as quality goes, the dry start to the season should see good quality and cuts. Hopefully price premiums will be offered for these types of clips. Good quality wool and a tighter supply could very well signal an increase in support to wool prices in 2024/25. But outside challenges are likely to remain with the high cost of shearing, animal health and feed continuing to impact profitability. Source: AWI June Market Intelligence