Sheep numbers, and thru that wool provide, proceed to be beneath downward stress. This can be a acquainted pattern of the previous three a long time, with Merino clips each shrinking in dimension and decreasing in common fibre diameter. Determine 1 exhibits annual Australian public sale volumes for 20–22 micron wool and the corresponding common worth for all wool offered in these micron classes. The worth collection is proven in deflated US greenback phrases, as this displays the worth degree and adjustments as the availability chain usually sees the market.
The 20–22 micron worth exhibits a barely rising pattern from the mid-Nineties to 2010, when it jumps to a better degree by means of to 2020 and the pandemic. The 4 to 5 years following the pandemic had been a interval of low costs, particularly given the continued downtrend in quantity. The correlation between worth and quantity is comparatively weak, with quantity accounting for round 30% of the worth motion proven in Determine 1.
Wool costs don’t function in a vacuum, however inside a posh of many fibres. Determine 2 takes the worth collection from Determine 1 and expresses it as a ratio of a weighted common worth of cotton, polyester, acrylic, and viscose, known as non-wool staple fibres (NWSF). On this graphic, the downward pattern in quantity is accompanied by a rising pattern within the worth ratio, till the pandemic disrupted the connection considerably. The rising pattern recommenced in 2022–23, albeit at a decrease degree, and has endured since as provide has weakened. Considered this manner, quantity accounts for practically two thirds of the change within the worth ratio. As quantity falls, the relative worth of broader Merino wool to non-wool staple fibre costs rises.
The place does this depart broad Merino costs at current? Determine 3 exhibits the month-to-month worth ratio for 20–22 micron wool to the NWSF from 2006 by means of to January. In January, the worth ratio was near the excessive reached in 2018, round 9, with the season-to-date ratio nonetheless working round 7. The ratio is excessive as a result of quantity is low. Quantity can’t raise till seasonal circumstances assist a broader clip and assist stabilise sheep numbers.
