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Insights June 2024

10 June 2024 |Wool

Insights June 2024

10 June 2024 |Wool
The June update provides an analysis of production and pricing trends for Australian wool producers.

Commodity overview

  • May saw mixed results for wool with a few microns having month-on-month increases, however most microns are sitting lower than the same time last month as well as year-on-year.
  • There was a steady decline in the number of bales offered across May resulting in the smallest sale of the season to date at the end of the month.  

Australian wool prices dropped during May with the Eastern Market Indicator (EMI) ending the month down 35 cents. The EMI ended May at 1,137c/kg losing the hard-won gains of April. This sits 6 per cent lower year-on-year. An improving AUD/USD exchange rate saw limited gains across the month. There had been an initial drop in the US EMI, however it remains 8 cents down from the end of April. The first two weeks of May saw large drops in the EMI of 20 cents followed by 18 cents. There were some improvements later in the month but nothing significant enough to cover these losses.

The coarser microns saw limited gains across May, particularly for 26, 28 and 30-micron wool sold through the Southern Centre and 28-micron wool in the North. These microns saw gains of between 1 and 12 cents month-on-month and are also all sitting higher year-on-year. The most significant was the Northern 28-micron wool that is now 20.8 percent higher year-on-year. However, this is still 27.7 per cent down on the five-year average, showing a steady decline over the past five years.

Finer micron wool struggled across May. Though there were some gains towards the end of the month, they were minimal compared to the declines seen earlier. Across the Southern selling centre the finer microns are all sitting 29-63 cents lower month-on-month. Comparisons to a year ago are also unflattering with wool between 16.5 to 18 micron in the south showing declines between 13.4-20.2 per cent. The medium microns are slightly better, only down 1.5- 6.4 per cent.

Australian Wool Innovation (AWI) has noted that demand remains highest for 1 per cent Vegetable Matter (VM) fleece. Buyers from China and India are requiring an average of 1 per cent VM for their completed orders. AWI reported that some finer micron fleeces with higher VM levels (2.5 to 5 plus per cent) were still finding support as the VM type is not difficult to comb at present.

Concerningly, wool prices fell at the same time as the volumes of bales offered tightened significantly. The final week of May saw only 31,282 bales offered. This was down 24.9 per cent from the final week of April and 38.3 per cent lower than the first week of 2024. Due to low volume Fremantle only had one selling day in Week 46 and will have no sales in Week 49 or Week 51. The forecast for the start of June is for less than 30,000 bales on offer nationally. The recent tightening of offering has brought season-to-date volume down 1.8 per cent compared to last season. The forecast for the 2024/25 season is currently indicating a decline in wool production of 5.8 per cent to 306 Mkg greasy. 

A graph showing the Eastern Market Indicator and weekly bales offered from January 2020 through to May 2024. The EMI has declined six per cent year-on-year and bales offered in May was down 20 per cent from April.
A graph showing micron price guides for 18, 20 and 28 micron wool since January 2020. 18-micron wool prices have fallen 13.4 per cent year-on-year while 20-micron wool has fallen four per cent and 28-micron is 0.5 per cent higher than a year ago.

Source: Australian Wool Exchange

This article is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). The information herein is believed to be reliable and has been obtained from public sources believed to be reliable. Rural Bank, a Division of Bendigo and Adelaide Bank Limited, ABN 11 068 049 178 AFSL/Australian Credit Licence 237879, makes no representation as to or accepts any responsibility for the accuracy or completeness of information contained in this report. Any opinions, estimates and projections in this report do not necessarily reflect the opinions of Rural Bank and are subject to change without notice. Rural Bank has no obligation to update, modify or amend this article or to otherwise notify a recipient thereof in the event that any opinion, forecast or estimate set forth therein, changes or subsequently becomes inaccurate. This article is provided for informational purposes only. The information contained in this article does not take into account your personal circumstances and should not be relied upon without consulting your legal, financial, tax or other appropriate professional.

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