Wool Market Update (June 2020)

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

The fall in the AWEX EMI has continued since the previous newsletter in April 2020, with the current price stabilising at 1,171c/kg clean, which is an additional 121c/kg or 10% reduction in price since April. The most significant cause of the softening price is due to COVID-19 leading to poor economic conditions globally.

Wool production forecasts are suggesting that wool production will continue to decline in 2020/21, despite the current return of better seasonal conditions.

This long-term reduction in wool supply, would indicate that the price for good quality wool should remain robust into the near future, provided that wool retains its market share.

Assuming a yield of 60%, this should result in net average returns for 19 micron wool, of around $8.25/kg greasy. This would produce a return of $49.50/head net for sheep cutting 6.0 kg/head greasy.

This price of $8.25/kg net compares with the average budgeted Break Even Price for clients in 2020 of $5.58/kg and that for the top 20% of $3.39/kg, providing a significant profit margin for low cost producers.