Wool Market Update (April 2020)

The following graph shows the AWEX Eastern Market indicator (EMI) in cents per kilogram clean, from August 2009 to date.

Currently the AWEX EMI is 1,292 c/kg clean, below the 10 year average of 1,334 c/kg for the first time in many years.  Assuming a 60% yield, this should result in net average returns to many clients with Merino clips, of around $9.00/kg greasy. This would produce a return of $54.00/head net for sheep cutting 6.0 kg/head greasy.

The EMI fluctuated between 1,500-1,600 c/kg during the end of 2019 and the beginning of 2020.

However the economic fallout from the COVID-19 pandemic, has caused the market to fall almost 20% since late February. As woollen garments are considered luxury items, the expected global recession will most likely decrease retail demand, which will delay a price recovery or may result in further reductions in the wool price.

This price of $9.00/kg net compares with the average budgeted Break Even Price for clients in 2019 of $6.00/kg and that for the top 20% of $4.36/kg, providing a reasonable profit margin for those clients who can minimise expenditure on their sheep.