Insights August 2021
Insights August 2021
- The Australian wool market has been on a three-week recess since the week ending 16th of July.
- The first two sale weeks of the 2021/22 season saw wool prices maintain their strength.
- Large offerings have been met by strong demand from Chinese and European buyers.
The Australian wool market continued to find support in July. The Eastern Market Indicator (EMI) is currently at 1,428c/kg, 8.5 per cent above the two-year average. The first week of the 2021/22 season saw the largest national offering of 51,260 bales since January 2021. The greater number of bales on sale did weigh on prices with fine and broad microns dipping in price before recovering in the second auction week of the season. Finer wool types continue to perform with 17-micron prices at Melbourne selling centre exceeding 2,600c/kg at the end of June. Prices have since eased slightly, back down near the 2,500c/kg mark for 17-micron wool. Fine wools are anticipated to maintain their strength as Chinese, European, and Indian demand increases. Vaccine roll outs across the developed world are allowing economies to open and consumer confidence to return. The northern hemisphere winter is driving buyer demand for wool to manufacture into woollen coats, suits, and other woven wear.
Broader wool prices have not fared well in comparison to the finer microns due to lack of demand and surplus supply. However, strong sheep meat prices have somewhat compensated for the lower broad wool prices. If the cost of shearing can be covered, the returns for crossbred sheep are still very strong. Producers will draw down on farm wool stockpiles if prices continue to trend higher.
The favourable weather outlook for the remainder of winter and into spring will see good pasture growth. However, cool temperatures and waterlogged soils could impact lamb survival. Overall, this shouldn’t have a significant impact on the volume of wool produced in the new season. National sheep numbers are expected to continue to rise as flock rebuilding occurs. Available on-farm feed and stronger wool prices than a year ago will support producers in coming months.
Sources: Australian Wool Exchange, Australian Wool Testing Authority