Fluctuations in the exchange rate were reported as an issue, with a rising Australian dollar choking off new business early in the week. Crossbred prices remain low but sale volumes are above year earlier levels, which is positive, so the supply chain continues to absorb the volumes, despite stocks of various qualities reported in many places.
The overall fibre diameter of the merino clip looks to have stabilised, so there is little change in the volumes of broad and finer merino wool beyond change in the overall volume. From a micron premium and discount perspective supply is therefore neutral at present, neither pushing the micron curve up or down.
Vegetable matter is running slightly above year earlier levels, yield is up slightly as is the average staple strength. The effects of a wet summer are showing up in the supply of cott, jowls and coloured wool, which makes putting consignments together that much more difficult.
2650-2700 cents looks to be the upper limit for the 17 MPG. The run up by the 17 MPG during the past month has resulted in the best prices since the spring of 2018 when the wool market started to roll off the peak levels of 2017 and 2018. Early stage processors go into a quieter time in the coming months, which tends to correlate with weaker prices.
Since mid-2021, when the wool market finished its main recovery from the low prices of the initial pandemic shock in mid2020, the 19 MPG has traded with 100 cents of 1700 cents. The market continues to trade along within this band without any sign or a rising or falling trend. Given the circumstances about in the wider world it seems likely something will rouse the 19 MPG out of this trading range.
The 21 micron volume despite picking up as the eastern regions have recovered from drought, remains some 50% down on its 2016-7 level. The lower volume will help broader merino prices in relation to other fibres (help push the sustainable price ratio higher) but will not be enough to negate apparel fibre price cycles.
Since 2000 the lower price limit for the 28 MPG has been around 400 cents, which is where it has been since October 2021. In relation to the 21 MPG and the 28 MPG the price ratio has settled around 0.31 with the low in this ratio usually coming in the January to March period. So will the 28 MPG lift in coming months of the 21 MPG ease?