The dollar and supply scenario have combined favourably in the past week to push the Eastern Market Indicator (EMI) to a new record high of 2116 cents a kilogram.
The indicator jumped an astonishing 126c at last week’s sales on the back of a frenetic market, and on Wednesday included the largest single day increase since 2002 of 99c/kg.
Prices for Merino wool, 23-micron and finer, lifted for the week by between 113c and 192c and prices for crossbred wool lifted by 60c to 100c.
Executive director of The National Council of Wool Selling Brokers of Australia Inc, Chris Wilcox, said one possible reason for the sudden jump was the release of the four-week roster last Monday, which showed forecast auction offerings significantly lower than previously forecast.
“The offerings are well below the levels for the same weeks in 2017 with 23,500 bales fewer expected to be offered this year compared with the same four weeks in 2017,” Mr Wilcox said.
“This reflects the the tight supply situation now given there are virtually no stocks held of Merino wool and the tough seasonal conditions are causing lower new wool production.”
Only 1.5 per cent of the 36,302 bales offered nationally were passed in, the lowest pass-in rate since November 2017.
The value of the wool sold was $87.3 million or $2441/bale, taking the season total to $351.9m compared to $308.6m to week seven last year.
Reaping the rewards after tough times
Wool grower Michael Rodger said the current wool market is “unbelievable”.
“I have never seen it like this before,” Mr Roger said.
The sixth generation wool grower from “Bindawalla”, Narrawa, who has toughed it out with his father Hector during trying times, said it has never been an option to change enterprises.
“In reality, it is the one thing we know how to do the best, and the environment is well suited to the Merino sheep,” Mr Rodger said.
“The 1990s were extremely tough, but at the end of the day we were still able to survive. We weren’t making a fortune, but we got through it.
“The fact of the matter is this country is just not strong enough to crop or run cattle, although I believe you are not going to make anymore money out of cattle then you are sheep. There is always going to be money in sheep.
“We just stuck with what we knew.”
Running secondary to their main enterprise of 3500 self-replacing Merinos and first cross operation is a 750 head crossbred flock.
The average micron of the Merino flock is 18.8, which is smack bang on where the premiums are showing some of the greatest growth in the market.
Last year their adult ewes cut a six kilogram fleece while their 10-month-old hoggets’ fleece weighed 3.7kg.
Mr Rodger said their goal is to see that fleece weight hit the eight kilogram mark.
The Rodgers’ always sell their main wool clip at the last wool sale in September.
“We have always stuck with the one player, and we have never chased the market,” Mr Rodger said.
We have always stuck with the one player, and we have never chased the market
“We believe it is a safe bet. If you start chasing the markets you don’t achieve anything - sometimes you make a premium, sometimes you make a loss, but it all averages out in the end.”
All Merinos are shorn at the end of August with crossbreds end of March, early April.
About 1000 wethers are run on their lighter slate country, kept until they are four-year-olds and then once shorn condition is added and they are sold to processors.
But this year, Mr Rodger said due to the tougher season they are planning to cash them in a bit quicker.
“We will shear them and sell them, we aren’t in the position to put anymore feed in them,” he said.
Fingers crossed the wool market remains sound when they sell in four weeks.
Shorn wool production forecasts lowered
Last week, the Australian Wool Production Forecasting Committee (AWPFC) reviewed its forecasts for 2017-18 and estimates for 2018-19.
Shorn wool production is now forecast at 322 million kg greasy, a decrease of 5.7 per cent in production for 2018-19. The projection is lower than the first forecast released in April of this year.
Committee chairman, Russell Pattinson, said the adverse seasonal conditions in many sheep producing areas across Australia has resulted in a high turn-off of sheep and lambs.
It will also mean lower average fleece weights in several states.
“The committee’s first forecast for the 2018-19 season made in April at 333 mkg assumed that normal seasonal conditions would prevail,” he said.
“That has obviously not been the case.”
As a result, wool production is expected to fall in all states except Tasmania with the largest reductions expected in NSW (down 8.9pc) and South Australia (down 6.0pc).
“How the season progresses over the next couple of months will be very important for overall production levels this season,” Mr Pattinson said.
AWTA test data for 2017-18 by micron showed reductions in weight of wool tested between 19.6 and 24.5-micron (down 11.3pc) while there was an increase in weight of wool tested between 16.6 and 19.5-micron (+11.7pc) as well as over 26.6-micron (+11.7pc). Production of wool 16.5-micron and finer fell by 10pc last season.