Wool Market Update (July 2021)

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

The AWEX EMI has risen dramatically since the previous newsletter in April 2021, with the current price at 1,468c/kg clean, which is an additional 168c/kg since April. All micron grades have been posting solid increases in price recently, however fine wools <18 micron have been performing particularly strongly, with a 35-40% price increase year on year.

Wool traders and exporters are still faced with shipping and logistical issues that are hampering their ability to efficiently transfer product from Australia to international processing facilities. This has increased their costs and will apply a restriction in the prices they are willing to pay.

On the other hand, the global economic recovery from COVID-19 is continuing, which has resulted in more international buyers returning, increasing the demand for the high quality, fine micron grades.

Assuming a yield of 65%, the current price should result in net average returns for 19 micron wool, of around $11.80/kg greasy. This would produce a return of $70.80/head net for sheep cutting 6.0 kg/head greasy.

This price of $11.80/kg net compares with the average budgeted Break Even Price for clients in 2021 of $5.59/kg and that for the top 20% of $3.06/kg, providing a significant profit margin for low cost producers.