This week I thought it would be worthwhile to talk about wool measurements and what they mean. It has long been reported that micron is the one measurement that has the largest influence on price and history supports this statistic. Greasy length, measured in millimetres and staple strength, measured in newtons per kilotex, have been considered the next two most important factors in determining price.
There are however a couple of other measurements that the wool trade look at very closely, that are not necessarily so well understood. The first one is the Hauteur, which is the estimated length of the fibre in the processed wool top and is expressed as a number, for example 68hm. The second measurement is related to the Hauteur and describes the variation of the measurement. This is expressed with the term co-efficient of variation of hauteur or CVH. Both these measurements are derived using the TEAM 3 formula (Trials Evaluating Additional Measurements). This formula was developed over 20 years and very closely predicts the processing performance of wool.
To arrive at the HM and CVH figures the TEAM formula uses the micron, length, strength, mid break percentage, vegetable matter, CV of length and CV of micron, all in a complex formula to give a result. For example, an 18 micron line that is 85 mm long, 40nkt and have a mid break less than 30% would have a CVH close to 40 (lower the better) while an 18 micron line that measures 105 mm and has a mid break over 80% will have a CVH over 50.
So what does all this mean? Most orders, even those in to China will have a maximum average CVH for the batch. It depends on the final use of the product to determine what this average is, but most are under 48 and in some cases closer to 40. While having a result that exceeds these averages of course doesn’t mean the wool cannot be sold, but it does mean that buyers need to build batches that can accommodate the higher CVH lots and in turn discounting these lines to suit.
Back to the start when I said micron was the biggest single price determinant. This may have been the case, and may well be again at some stage in the future, but right now CVH is having a very big impact on price.
The final measurement that is worthy of a mention is yield. While it is widely understood, I am not sure whether it’s influencers are? Simply, every stage beyond farm gate refers to prices in clean cents per kg which means buyers work towards a clean cents per kg average for a batch. A 3% yield difference on an average merino fleece type at the moment effects the greasy price by nearly 50 greasy cents per kg, quite significant.
Two selling days in Melbourne this week with the market opening up in solid fashion and adding 5-10 cents to most types across the board.
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This week saw another strong cattle market with outstanding sales across all of our yards.
This trend continued with today’s on farm sale for the Hine family at Harcus River Road, Marrawah.
186 vendor bred Angus and Hereford cross steers and heifers (February drop) averaged $1,174 or 440 – 470c p/kg live weights which is a brilliant result.
Yesterday at the Powranna Livestock Marketing Complex Roberts offered 525 store cattle from across the North and South.
Steers made 400 – 450c p/kg live weights, whilst lighter steers made up to 600c p/kg live weight.
In the heifer portion 340 – 400c p/kg live weights with light heifers again up to 600c p/kg.
Prime cattle continued to remain firm, with cows selling up to 260c p/kg in some markets.
Lambs and mutton remain firm again, with heavy mutton at $100 and lambs still selling at 600c p/kg dressed weight.
Reminder next week there will be a Quoiba Store Sale and we have a clearing sale at Table Cape on Thursday the 20th of October.
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It was an extremely small offering for this time of year this week. 35,000 bales rostered nationally with 2,500 ex New Zealand selling in Melbourne on Tuesday. The positive sentiment from last week continued into this week with most merino price guides firming 5 to 15 cents clean in early trade. Crossbreds failed to fire with 28s easing 15 cents on day 1. Cardings followed the merinos with a 10 cent lift. On Wednesday in Melbourne there was a passed in percentage of only 1.5% which is about as low as you will ever see, illustrating that growers are generally comfortable to trade at these levels.
We talk about it a lot but the pattern continues of best performing types being keenly sought, maintaining healthy premiums over excessive length or part tender. I’ve reconfirmed with major buyers that this trend is here to stay. The gap will in fact increase as we move towards the new calendar year. Interestingly 19.5 and broader merinos have been a bit unloved over the last 3 weeks or so. China again started enquiring into these types last week, hence they look to have found a bottom for the short term.
Talking to another large Chinese trader and he said the “hand to mouth” buying strategy set by the Chinese looks to set to continue also. With wool being sold and bought now for late October/early November shipment. This is making the current market a little difficult to read; is it simply a lack of supply for the time of year? Or genuine new business driving it in the short term. We are expecting a small increase on auction volumes next week – if we can maintain a bit of momentum it will be a positive sign. Also if Chinatex re renters the market in a big way it could just be enough to drive the market higher.
To summarise, the general feel from industry participants is positive. A dramatic surge upwards is difficult to foresee from current levels, but there is also limited downside. If nothing else it should make the decision to sell a bit easier. If for whatever reason growers are inclined to holdback a portion of their that’s where some data analysis should be done as there’s real money to be gained or lost trading the discounts.
Two day sales in Sydney, Melbourne and Fremantle next week, approx. 37,000 bales predicted. We’re tracking about 5% ahead of last year for volume, this will level out very quickly if sales continue to be on the light side.
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This week saw highlights in the market on all fronts.
Young prime cattle for the butcher market punched through 370c live weight at Quoiba on Wednesday, while spring sucker lambs have also gone to new heights of approximately 650c dressed weight at Quoiba on Monday with butchers keen to secure quality for their shop fronts.
Mutton is very keenly sought after in all markets at present with many mutton orders or quotas needing product to fill contracts.
Yesterday we conducted a very successful King Island Cattle Sale with 1,286 cattle sold to average $1,286 on the island. To give credit where credit is due, the breeders presented an excellent offering of yearling cattle with some highlight sales.
Sustainable Ag 132 Angus steers, rising 2 yrs $1,700
B D & L J Thorne 93 Angus steers, 14 months $1,480
B D & L J Thorne 100 Angus steers, 14 months $1,370
King Isle Farms 25 Angus steers, 14 months $1,420
G J Lynch 11 Murray Grey x heifers $1,400
I & K Smith 32 Hereford steers $1,290
I & N Loane 19 Angus steers $1,380
I & N Loane 15 Angus heifers $1,270
This morning Roberts offered on AuctionsPlus:
Account: Benham Tasmania – 185 Landfall blood Angus steers, ‘Forward contract’, for January delivery to realize 364.7c p/kg live weight.
Account: WR Baxter & Son – sold 16 Landfall blood Angus heifers; 383kg/$1,433 and 50 heifers 335kg/$1,372 or 409c p/kg live weight.
Next week Powranna Store Cattle Sale – Thursday 12 Noon.
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Last week Rob referred to the situation where we occasionally see one selling centre offering wool for sale in isolation. Last week was one of those times due to the Melbourne public holiday on Friday, where we saw Melbourne sell Tuesday & Wednesday, while Sydney and Fremantle sold on Wednesday & Thursday. While there were two centres selling on Thursday we could only really look to Sydney for some market direction, as the Fremantle market is not quite as relevant to us.
What we saw on Thursday in Sydney caught a few by surprise. The market was clearly dearer; at the same time the Aussie dollar hit its weekly high of .77 USD and therefore gave us a read on what might happen this week.
The market opened in Melbourne on Wednesday with some renewed vigour, following on from Sydney last week. It also helped that the USD lost nearly 100 points on Wednesday morning just prior to the auction opening, all resulting in a market quoted 15-20 cents dearer.
On a different note, it seems the wet weather across many parts of the country is having an impact on wool being able to be moved from shearing sheds to wool stores. This is quite an obvious statement, but it’s the effect on the market that it may have that could be interesting. As we know, wool volumes are already at historic lows, as we move into what is traditionally the peak volume period for sales. Upcoming sale roster estimates are being wound back, with the next 3 weeks showing between 37,000 and 40,000 bales nationally.
The National Wool Declaration is a very important document for the industry now, with more and more buyers having orders that relate to the various categories that are able to be declared. This form is found on the bottom of the wool classers specification and should be completed as a matter of course.
Sales are rostered in all three centres next week, with Melbourne selling over three days due to an NZ sale on Tuesday.
As always, please don’t hesitate to get in touch should you have any questions – e-mail firstname.lastname@example.org.