Insights September 2021
Insights September 2021
- The Australian wool market has been up and down over the last month, with prices generally trending lower.
- Reduced wool offerings have been met by a fall in buyer sentiment, particularly early in the month.
- The number of sheep shorn and average cut per head are projected to rise in 2021/22 following favourable seasonal conditions.
The Australian wool market returned from a three-week recess in early August. Prices have been up and down, though they have generally trended lower throughout the month, particularly in Melbourne and Sydney. The Eastern Market Indicator (EMI) is currently at 1,332c/kg, 1.7 per cent above the two-year average.
The wool market saw a reduction in the bales on offer throughout August. This follows the substantial wool offerings that were seen throughout July as sellers looked to take advantage of the strong demand prior to the break in sales. The reduced number of bales on offer throughout August was matched by relatively poor buyer sentiment which saw prices fall across almost all microns. Reduced interest from Chinese buyers following the break combined with a strengthening Australian dollar were the driving factors behind the decline prices. High pass in rates throughout most of the month stopped prices from falling further. The 17-micron wools held up well, with prices at the Melbourne selling centre rising by 47c/kg across the month. This was the only micron across Sydney or Melbourne to record a price increase.
Interest from Italian buyers continues to dominate the super fine sector though demand from Italy is not yet back at pre-COVID levels. Demand from Chinese buyers has continued to rebound after dipping in early August. As the northern hemisphere continues to move towards the cooler winter period, buyer demand for wool to manufacture into woollen coats, suits, and other woven wear should also continue to pick up.
Broader and crossbred wool prices have remained more stable than finer wools. Despite this, a general downward trend was still seen throughout the broader wools. The Western selling centre has generally seen prices hold up better than in the east thanks to a recess in the middle of August. Particularly high pass in rates in the west also helped to increase buyer competition for the remaining lots.
Production throughout 2021/22 the season has been forecast to increase by 5.2 per cent on 2020/21 figures. Both the number of sheep shorn and average cut per head are projected to rise. Strong rainfall through most major wool producing regions and favourable forecasts throughout spring will drive these production rises over the coming months.
Sources: Australian Wool Exchange, Australian Wool Testing Authority