Mecardo last looked at the economic backdrop to the wool
\nmarket in early March, concluding there was little optimism coming from China
\nand Europe, with the USA providing the best signals for demand. <\/p>\n
Firstly, for a change, an improving economic measure. Figure Anecdotal feedback and general commentary (see Nomura Figure In early 2025, the US economy was poised for better growth
\n1 looks at Europe through the German Ifo Manufacturing Index (read more here<\/a>), comparing it to the merino price (indicator fleece
\ncomponent of the clip) in US dollar terms. In recent months, the Ifo survey has improved
\n(there is
\na range of indices produced by the Ifo Institute). It is early days yet, but
\nthe downtrend in the Ifo manufacturing index from 2021 to 2024 looks to have
\nfound a base. In US dollar terms, the merino price has done likewise in the past year. <\/p>\n
\nSecurities (read here<\/a>)
\nas an example ) has not improved for China. If anything, it has become worse.
\nIf Australian Wool Innovation is correct and half of the Australian merino clip
\n(or equivalent) is consumed at the retail level in China, this continues to be
\na big problem. As the US Federal Reserve notes, \u201cChinese domestic consumption
\nis weak, never fully recovering from COVID-era lockdowns and continues to be
\nconstrained by the ongoing property slump\u201d (read
\nmore here<\/a>). <\/p>\n
\n2 compares the Chinese GDP (economic growth) and the change in the merino price
\n(USD terms again), with guestimates for the GDP growth rate in 2025.
\nA saving grace may be that China is a big country with a big economy so parts
\nof it may provide some demand for wool. <\/p>\n
\nthan Europe or China. The vicissitudes of the Trump administration\u2019s policies
\non trade are testing this growth. Figure 3 compares the year-on-year change in the US 5-year bond yield (inverted), advanced by 18 months, and the merino price in US
\ndollar terms. This measure provides some forecasting of the trend we can expect
\nfor demand,
\nhence wool prices. The change in bond yield jumps around, with a rising trend
\npointing to a generally positive influence on demand in the coming season (so
\nlong as the aforementioned vicissitudes do not grow).<\/p>\n","protected":false},"excerpt":{"rendered":"Mecardo last looked at the economic backdrop to the wool market in early March, concluding there was little…\n","protected":false},"author":2,"featured_media":13487,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[64,63,99,15104,171],"class_list":{"0":"post-13486","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-market-analysis","12":"tag-markets"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/13486","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=13486"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/13486\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/13487"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=13486"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=13486"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=13486"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}