Mecardo Analysis - A review of combing Merino wool supply
- By: "Farm Tender" News
- Ag Tech News
- Sep 04, 2018
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By Andrew Woods | Source: AWEX, ICS.
In April and June Mecardo looked at the supply of Merino combing volumes, highlighting the drop in broad Merino volumes in 2018. With seasonal conditions moving to extremes in many eastern Australian regions, it is timely to review the supply of Merino combing wool again.
Figure 1 shows the change in the volume of combing length Merino wool sold in the three months to August, broken up by fibre diameter and three regions. The regions are Western Australia, eastern Australian pastoral regions (northern South Australia, through western NSW into Queensland) and eastern Australian non-pastoral.
In simple volume terms, 21 micron is the category which has the largest shortfall in supply of 2,376 clean tonnes (equivalent to around 19,000 farm bales). The 22 micron category has the next largest fall in volume, followed by 20 micron. Unlike early 2018 when Western Australian production was driving the change in national volume for the broad Merino categories, the eastern pastoral regions are now leading the way.
Figure 2 shows a similar analysis but with the change in volume shown in proportional terms. In some ways, this schematic is more worrying. Look at the drop in supply for 22 micron and broader Merino combing wool – all down by 60% in the three months to August. These are minor micron categories in terms of production and processing but a 60% drop year on year is a massive fall in supply.
On balance 19 micron supply is effectively unchanged year on year. The micron categories finer than 19 micron (the average Merino micron) all had higher volumes in the June to August period with this supply coming from the non-pastoral eastern regions. Impressively fine Merino premiums have held during this period with prices for the very fine micron categories rising.
Given the seasonal conditions prevailing we will see further increases in the production of sub-19 micron wool as this season progresses. The actual supply of wool to market will be slightly lower in 2018-19 reflecting the low level of grower stocks reported by brokers. This wool was sold last season.
Key points
* In clean kilogram terms, the 21 micron category had the largest drop in supply in the June to August period.
* While Western Australia drove the drop in broad Merino volumes in early 2018, the eastern pastoral regions are now driving the drop in broad Merino volumes.
* 19 micron volumes were effectively unchanged.
Sub 19 micron volumes increased, with the increase larger for the finer micron categories.
What does this mean?
The undersupply of broad Merino combing wool continues and remains intense. This will help support broad Merino prices. The supply of finer Merino micron wool is starting to pick up, as the dry conditions in eastern non-pastoral regions start to show up in production. Wool supply remains as complex as ever.
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