Mecardo Analysis - Non mulesed volumes and price effect
- By: "Farm Tender" News
- Ag Tech News
- Feb 14, 2019
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By Andrew Woods | Source: AWEX, ICS.
AWEX analysis of wool sales this season show a tangible premium being paid for non-mulesed wool for 20 micron and finer Merino fleece, which is good news. Such a price signal is required to boost the proportion of non-mulesed wool offered for sale at Australian auctions. This article takes a look at supply and the different premiums according to wool specification.
The supply of non-mulesed wool is heavily skewed to finer micron categories for Merino wool. It is fairly evenly distributed for crossbred fleece across the different micron categories. Table 1 shows a snapshot of eastern Australian Merino fleece sales from last week (sale week 32) broken up by micron and staple length. It shows the proportion of wool Merino fleece sold for each combination of micron and length which was declared as ceased or non-mulesed.
At the very fine end, all of the 13-13.5 micron wool sold was non-mulesed and nearly all of the 22 micron and broader wool was not declared as CM-NM. This pattern has been a consistent one, with the rates of declaration rising as fibre diameter falls. It means that exporters and mills have some opportunity to build fine micron consignments which are CM-NM, but much less of an opportunity for the broader Merino categories (although there is some coming from Western Australia). With regards to staple length, most of the CM-NM supply is between 60 and 80-90 mm greasy length (although Western Australia is supplying some longer CM-NM Merino fleece).
Last week Italian interest in the greasy market was quite strong, with solid demand for good style fine Merino wool, especially if it was declared as CM-NM. Figure 1 shows a simple comparison of prices from last week for Merino fleece, broken into two staple strength groupings – 20-36 N/ktx and 37 and greater N/ktx. The analysis is shown for 15 through to 20.5 micron. No comparison can be made of 14 micron and finer wool as it was effectively all declared CM-NM and no real comparison can be made of 21 micron and broader as there was very little CM-NM declared wool for these broader categories.
The higher staple strength group showed consistent and sizeable premiums for the week, probably not to be repeated again this week to that extent (4% of 2500 cents equates to a dollar premium) as the flurry of Italian interest in the last designated superfine sale for the season settles back down. However, the simple analysis shows a consistent price effect, which narrows as the micron becomes broader.
The second, lower staple strength series shown in Figure 1 tells a different story, with the price effect swinging from positive to negative. It shows that, at this stage, non-mulesed consignments for lower quality Merino fleece wool are not in sufficient numbers to pull prices substantially higher on average.
Key points
* The supply of non-mulesed Merino fleece continues to be heavily skewed to the finer, combing categories.
* At auctions last week, premiums for better quality (higher strength) Merino fleece were evident.
* The non-mulesed price effect for lower quality Merino fleece was more hit and miss.
What does this mean?
The build-up in demand for non-mulesed wool which has been evident in non-auction contracts during the past couple of years, and has spilled into the auction rooms this season, continues. Price effects are limited by supply (as well as demand) with minimal broad Merino volumes declared as CM-NM. Premiums for CM-NM Merino fleece are focussed on the finer micron, better style/strength Merino categories at this stage. Given the development on the demand side, it is the supply side which is limiting at present to a widening of these premiums (or discounts for non-declared/mulesed wool).
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