Mecardo Analysis - Ultrafine wool prices
- By: "Farm Tender" News
- Ag Tech News
- Sep 25, 2018
- 547 views
- Share
By Andrew Woods | Source: AWEX, ICS.
AWEX publishes wool indicators (MPGs) from 32 micron to 16.5 micron. These indicators reflect price movements in the bulk fleece categories in the greasy wool market. 16 micron and finer wool made up only 3% of the merino wool sales in the past year, which explains why AWEX do not publish indicators for these finer micron categories – there is not enough volume. This article takes a look at average combing fleece prices for these finer micron categories not covered by the AWEX MPGs.
The price series below show monthly average prices for combing length fleece wool, without any subjective faults and vegetable fault limited to a maximum of 2%. The idea is to get a simple average price guide for combing fleece, while keeping in mind there can be a wide range of prices around this average.
Figure 1 shows a monthly average price series from late 2015 through to the current month for 16, 15.5 and 15 micron. These categories have basically doubled in price since 2015-2016, in line with the main Merino market. Interestingly, the price series have not changed greatly since early 2018, trading through most of this calendar year on a plateau. The price complexity of the market has picked up in recent months with increased premiums for high staple strength and it appears also for non-mulesed wool.
Figure 2 repeats the exercise for 14.5, 14 and 13.5 micron fleece wool. The price series jump around a little more reflecting the lower volumes and more volatile pricing, however, a similar pattern is shown with prices reaching a high in early 2018 and then stabilising as the market went into its “off-season” in the autumn. The market is now entering its active part of the season again with the twin features of good demand and rising supply due to dry seasonal conditions.
To get a longer-term perspective on these price series, Figure 3 shows the average monthly price series for 15.5 micron from the mid-1990s onwards. The current market level is on par with the 2011 peak, but well below the high levels of the pre-2003 period when the supply of these fine micron categories was much smaller.
Key points
* 16 micron and finer prices have been relatively stable in 2018, after doubling their value from the lows of 2015-2016.
* Interest in these categories is strong as the market enters the active season for ultra and super fine wool.
* The average price series may be weighed down by the increase in supply, even if prices for the better style wool pick up.
What does this mean?
While the average combing price series do not reflect prices for the better style lots favoured by specialty processors, they do give a reasonable idea of how these micron categories are travelling. Prices have done little since February, as the main Merino categories rose strongly after Easter. The price structure for this part of the wool market has been relatively simple by historical standards in recent years. This appears to be changing as premiums for better style types increase and increased supply starts to weigh on the less “flash” wools. In addition, premiums for non-mulesed wool appear to be increasing (for the better style wools) and issues are reported for knitwear types. It seems likely that the price structure for this part of the greasy market is going to become a lot more complex.
Share Ag News Via