Market Morsel: A tale of two markets

Fibre | 19th September 2022 | By Mike Avery

Market Morsel

It was a tale of two markets this week, with finer merino prices falling while the 19 micron and broader merino categories were steady (lifting in US dollar terms). Exporters report that there is plenty of enquiry for 19.5 through 22.5 micron wool, at good margins, which is why prices for these categories sneaked up in US dollar terms this week.

On the finer side there are reports of Chinese topmakers selling cheap wooltop into Europe, which is having a downward effect on these categories in the greasy market. With the domestic Chinese market under duress, it seems likely these mills are diverting wooltop to Europe and due to cashflow requirements they are selling at a discounted price. The greasy wool market often reaches a spring low in the AugustOctober period, so the hope is that fine merino prices will steady in the near future.

Despite the falls in recent months fine merino prices and premiums remain at high levels, something which cannot be said for crossbred wool which is struggling along at low price levels in relation to polyester. The economic backdrop to the wool supply chain remains a challenging one, and will continue to be so through much of this season.

17 Micron

The finer merino micron categories fell heavily this week, as shown by the AWEX 17 MPG. Even prices for RWS wool fell, as the base price followed the lead of the general market. In terms of premiums and discounts, prices for the finer merino categories have moved back towards a more classic European structure with increased discounts for longer length, lower strength and so on.

19 Micron

Prices for 19 to 21 micron remains solid, lifting slightly in US terms this week. Exporters report a good level of enquiry for these categories, just when a lot of wool is stuck on farms or on sheep, due to rainfall. This strength of demand is reflected in the forward bidding available for these micron categories.

21 Micron

South African reported RWS premiums were lower this week, compared to recent sales. This may be related to the logistics logjam South Africa has in clearing wool built up during the Chinese ban on their wool from April through August.

28 Micron

The 30 micron crossbred fleece prices have spent the past year trading at twice the polyester staple fibre price, which has generally been the low level for this ratio since the early 1970s. That is the good news. The bad news is that it does not tell us when the ratio might increase, and if the polyester price eases it is likely to drag the 30 micron lower.

Provided by Elders Wool. Prepared by Andrew Woods (Independent Commodity Services) with contributions from the Elders wool team.
Photograph courtesy of @krisifrost


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