Low wool volume does nothing for price in 2024

The question of when the wool market will improve is too hard to answer. Experts look back on 2024 and try to predict what 2025 will bring.

The wool market has been lacklustre in 2024, with prices fairly flat.

The wool market in 2024 can only be described as “lacklustre”.

And despite experts believing the market would improve early in the year, there is potential prices won’t move too much until spring 2025.

The current Eastern Market Indicator closed the year at 1154c/kg.

Mecardo managing director Robert Herrmann said the wool market had been “quite demoralising”.

“Year to date the Eastern Market Indicator is down 5.9 per cent,” Mr Herrmann said.

“What’s probably as concerning is the Australian dollar is lower, so the EMI in US dollar terms is actually down 11 per cent. It is disappointing, it tells us demand has weakened, despite the volume of bales sold being less,” he said.

Mr Herrmann said in the June to December period in 2023, on average 38,689 bales of wool were sold each week, and for the same period in 2024 the average was 31,888.

“It’s totally down to world economics, we know over history that wool is a discretionary item, so when things are tough it has to compete on price with other fibres.”

Mr Herrmann said looking ahead it would recover, as economic conditions improved.

“But the big question is when?”

“This time last year we thought we were close. But there are a couple of positives, Chinese mills are making investments to expand capacity and the free trade agreements with the likes of India are positive,” he said.

There isn’t a lot of wool in storage, with volumes low for the year.

Meanwhile, the latest estimates from the Australian Wool Production Forecasting Committee puts wool production in the current financial year at 279.4 million kilograms shorn from 63.2 million sheep, down 12 per cent on last year.

Committee chairman Stephen Hill said wool producers were making decisions to stop running sheep or to decrease numbers.

“This is due to commodity prices, input costs and other external factors,” Mr Hill said.

Mr Herrmann said this showed the decline was not just seasonal and sheep numbers were less likely to recover.

“So if we combine lower volume, with the current weak demand improving, we are likely to see a volatile market going forward.”

Southern Aurora Markets’ Mike Avery said the only “proper word” to describe the 2024 market was “consistently disappointing”.

“The price levels we are at now are not great, but there are signs it will get better,” Mr Avery said.

“The fundamentals are fine, but politics, world economics and cost of living pressures are contributing.”

Mr Avery said there was expectation prices would turn around by spring 2025.

“Prices will lift and demand will come, as there is very tight supply.”