Mecardo Analysis - Sub-17 micron price deciles
- By: "Farm Tender" News
- Ag Tech News
- Apr 04, 2019
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By Andrew Woods | Source: AWEX, ICS.
This article is bought to you by Extend Security.
Sub-17 micron wool has accounted for 6% of wool volumes sold this season. These categories also account for the highest priced categories by the nature of their fibre diameter. With this is mind, this article takes a quick look at sub-17 micron percentiles for the past five years and the current micron price curve.
Table 1 (below) provides the price percentiles for the past five years (to March) for 12.5 to 16.5 micron. The wool data used was sound, combing length merino fleece without any subjective fault (such as heavy colour or cott). This wide range of specifications captures a wide range of wool types, and in doing so gives a reasonable view of the relative prices of these micron categories. At the bottom of the table, current (March 2019) prices are provided where they occurred along with their price rank.
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Figure 1 draws on the data from Table 1 by showing the five year median price level and the current price level, where available. The effect of drought is shown clearly with the micron price curve markedly flatter for the current price compared to the five-year median price level (which in itself was a period more often than not of small micron premiums). The broader end (16.5 micron) is higher in comparison to the median price level, reflecting the better performance of the broader merino categories, which is a benefit hard won by a drastic reduction in supply.
Fine micron premiums and broad micron discounts are very sensitive to changes in supply. Relative pricing of different categories of wool is where supply regularly influences the price structure of the wool market. This should be kept in mind when looking at relative prices in the current market.
Figure 2 shows an extended micron price curve from 14 micron through to 40 micron for combing fleece wool sold at auction in Australia during March. This puts the current prices shown in Figure 1 in some context with the other parts of the extended wool market.
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Broad merino prices are flat from around 18 micron to around 22 micron. Prices then fall away through to 32 micron where the price curve flattens out. Australian prices for the broad crossbred categories (broader than 32 micron) have picked up in relation to the New Zealand market in recent months which has itself lifted from the low levels of late 2018.
Key points
* Sub-17 micron prices continue to trade at (albeit smaller) premiums to medium and broad merino wool.
* The price curve for sub-17 micron prices has flattened compared to the five year median level, reflecting the drought supply of wool.
* The big drop in supply of broad merino wool is reflected in the clear bump in broad merino prices.
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What does this mean?
When considering fine wool prices and studying fine micron price deciles, keep in mind the current market is subject to the effect of drought at present. Fine micron prices are definitely flatter than the five year micron price curves. Despite a surfeit of supply, fine micron price rankings are at high levels on the five year price percentiles, with the severe shortage in broad merino categories helping support merino prices generally.
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