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Wednesday, January 29, 2014

How different is Freo?

By Andrew Woods  |  Source: AWEX

Key points

  • Fremantle has accounted for 22% of 18-23 micron offerings wool this season to date.
  • For wool finer than 18 micron and broader than 23 micron, Fremantle has accounted for 5% of wool offered this season in Australia.
  • Wool in the major Fremantle micron categories receives good competition, with negligible discounts to eastern Australia.
  • Wool in minor categories such as crossbred of very fine merino has a wider range of spread to eastern Australian prices.

2014-01-29 How Different Is Freo FIG 1 UPDATED

2014-01-29 How Different Is Freo FIG 2 UPDATED

2014-01-29 How Different Is Freo FIG 3 UPDATED

Traditionally, wool from Western Australia (sold in Fremantle) was quoted at discounts to wool from eastern Australia. This article looks at wool from the different selling centres this season so far, to put wool volumes and quality into perspective.

Figure 1 provides a breakup of merino fleece offered for sale for the season, to late January, by selling centre and by micron category. The big wool supermarket is Melbourne, with a range of fibre diameter greater than Sydney and half of the total national offering.  This season, Fremantle has offered more 21 and 22 micron wool than Sydney. The latter tends to have a lot of fine merino wool for sale in the spring, accentuated this season by drought.

In Figure 2 the same sales centre data is expressed as a proportion of each micron category. This gives a feel for where each sales centre stands in terms of wool sold in Australia.

How different is the Fremantle selection? The key differences are in volume and spread of fibre diameter offered.  In the season to late January, Fremantle has accounted for 18% of the wool offered for sale, Melbourne 51% and Sydney the balance of 31%. When looked at by fibre diameter, Fremantle has accounted for more than 24% of the offering for 18 micron through to 23 micron. Outside of this micron range, the Fremantle offering forms a very small component of wool sold.

What does all this mean with regards to wool prices in Fremantle versus eastern Australia? For the micron categories where there is reasonable volume, prices tend to be close to eastern prices. This season, this means the 19 through 22 micron categories where Fremantle has offered nearly a quarter of the volume. For the past 5 years, the western 21 MPG has had a median discount to the eastern 21 MPG of 0.5%, and spent some 18% of the time higher.

For wool on the edge of the Fremantle distribution, discounts increase on average but also fluctuate more. The western 18 MPG has had a median discount to the east of 2% for the past 5 years, and has spent only 8% of the time at higher levels. The median Freo MPG discounts to the east for the past 5 years are shown in Figure 3.

(Update of original article published 22 November 2013)

What does this mean?

Fremantle offers wool with a fairly narrow range of micron categories. Wool within the main Fremantle micron ranges sells at negligible discounts to wool in eastern Australia. Wool outside of the main Fremantle categories tends to have a wider range of discounts to comparable eastern Australian types, although in the current market there is little price difference between the centres.

Mecardo information is provided to assist in your marketing decisions. It contains a range of data and views on the current market. It is not intended to constitute advice for a specific purpose. Before taking any action in relation to information contained within this report, you should seek advice from a qualified professional. The information is obtained from a variety of sources and neither Mecardo nor Ag Concepts Advisory will be held liable for any loss or damage whatsoever that may arise from the use of information or for any error or mis-statement contained in this report. 


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