The following graph shows the AWEX Eastern Market indicator (EMI) in cents per kilogram clean, from August 2009 to date.
The EMI rose 242 c/kg from mid November 2018 until March 2019, but since March, the market has eased 84 c/kg due to a large supply of poor quality, drought affected wool, plus the uncertainty caused by the Chinese ban on South African wool. However, the current prices are still exceptionally high, despite the recent fall. Wool production forecasts are suggesting that wool production will be down 12.6% in 2018/19 and a further 4.5% down during 2019/20 (assuming average seasonal conditions), as producers continue to destock.
This long-term reduction in wool supply, would indicate that the price for average quality wool should remain robust into the near future.
Currently the AWEX EMI is at 1,943 c/kg clean. Considering the dusty, low yielding wool produced during this Autumn, this should result in net average returns to many clients with Merino clips, of around $10.70/kg greasy. This would produce a return of $64/head net for sheep cutting 6.0 kg/head greasy.
This price of $10.70/kg net compares with the average budgeted Break Even Price for clients in 2018 of $6.00/kg and that for the top 20% of $4.16/kg, providing a significant profit margin.